Stock Market News & Stocks to Watch from StraightStocks » Federal Deposit Insurance Corporation

U.S. Bank Failures Hit 124 – Analyst Blog

Zacks Market Commentaries — Mon, 23 Nov 2009 14:00:00 +0000

U.S. regulators on Friday closed down Commerce Bank of Southwest Florida. Though there are some early signs of economic recovery, bank failures go on growing with rising loan defaults. This takes the total number of bank failures to 124, compared to 25 in 2008 and 3 in 2007. The weak economy continues to weigh heavily on banks with a stream of loan defaults.

As the industry has to tolerate bad loans that were made during the credit explosion, the trouble in the banking system goes even deeper, increasing the possibility of more bank failures. However, the regulators are trying to avoid panic by seizing banks slowly. Also, the slow seizing could be a strategy as it is hard to get buyers for so many failed banks.

Commerce Bank had total assets of $79.7 million and total deposits of about $76.7 million. The failure of Commerce Bank represents another impact on the Federal Deposit Insurance Corporation’s (FDIC) fund for protecting customer accounts, as it has been appointed receiver for the bank. The latest failure is expected to cost the FDIC's insurance fund about $23.6 million.

Bank failures have cost the federal deposit insurance fund more than $28 billion so far this year. The FDIC insures deposits at 8,195 institutions with roughly $13.5 trillion in assets. When a bank fails, it reimburses customers for deposits of up to $250,000 per account. The outbreak of bank failures has significantly stretched the regulator’s deposit insurance fund.

The fund corpus now stands below $10 billion, down from $45 billion a year ago. Central Bank of Stillwater, Minnesota, will assume all of Commerce Bank’s deposits. The acquirer also entered into a loss-share agreement with the FDIC on $61 million of Commerce Bank's $79.7 million in assets. In the second quarter of 2009, the number of banks on the FDIC's list of problem institutions grew to 416 from 305 in the first quarter. This is the highest since the savings and loan crisis in 1994.

Increasing loan losses on commercial real estate are expected to cause hundreds more bank failures in the next few years. The FDIC anticipates the bank failures to cost about $100 billion over the next four years. In order to replenish the declining fund, the FDIC board recently mandated the U.S. banks to pay fees for three years in advance.

Also, the regulators are considering requesting the healthy banks to bail out the government soon as it is necessary to replenish the deposit insurance fund, which has slipped to 0.22% of insured deposits, below the mandated minimum of 1.15%. The FDIC also has access to the Treasury Department credit line of up to $500 billion.

The failure of Washington Mutual last year was the largest in U.S. banking history. It was acquired by JP Morgan Chase (JPM). The other major acquirers of failed institutions since 2008 include Fifth Third Bancorp (FITB), U.S. Bancorp, Zions Bancorp (ZION), SunTrust Banks (STI), PNC Financial (PNC), BB&T Corporation (BBT) and Regions Financial (RF). The failed banks are victims of recession and rising loan losses.

As a result of the ongoing market turmoil, these institutions experienced massive capital erosion stemming from losses due to a significant exposure to collateralized mortgage obligations, commercial real estate loans and other commercial and industrial loans. All these factors were responsible for a drag on profitability and write-downs.

According to the FDIC, the bank failures have cost the federal deposit insurance fund more than $28 billion so far this year. Though current signals indicate that the economy may stabilize, we expect loan losses on commercial real estate portfolio to remain high for banks that hold large amounts of high-risk loans.
Read the full analyst report on "JPM"
Read the full analyst report on "FITB"
Read the full analyst report on "ZION"
Read the full analyst report on "STI"
Read the full analyst report on "PNC"
Read the full analyst report on "BBT"
Read the full analyst report on "RF"
Zacks Investment Research

Zacks Analyst Blog Highlights: JPMorgan Chase, Fifth Third Bancorp, Zions Bancorp, SunTrust Banks and PNC Financial – Press Releases

Zacks Market Commentaries — Tue, 17 Nov 2009 11:45:23 +0000

For Immediate Release

Chicago, IL – November 17, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: JPMorgan Chase (JPM), Fifth Third Bancorp (FITB), Zions Bancorp (ZION), SunTrust Banks (STI) and PNC Financial (PNC).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Monday’s Analyst Blog:

Bank Failures Rise to 123

The failed banks were -- Century Bank, FSB of Sarasota, Florida with $728 million in assets and $631 million in deposits, Orion Bank of Naples, Florida with about $2.7 billion in assets and $2.1 billion in deposits and Pacific Coast National Bank of San Clemente, California with $134.4 million in assets and $130.9 million in deposits.

These bank failures represent another sizable impact on the Federal Deposit Insurance Corporation’s (FDIC) fund for protecting customer accounts, as it has been appointed receiver for these banks. The failure of Century Bank is expected to cost the deposit insurance fund about $344 million, Orion Bank’s failure will cost about $615 million and the failure of Pacific Coast National Bank is expected to cost about $27.4 million.

The FDIC insures deposits at 8,195 institutions with roughly $13.5 trillion in assets. When a bank fails, it reimburses customers for deposits of up to $250,000 per account. The outbreak of bank failures has significantly stretched the regulator’s deposit insurance fund. At Jun 30, 2009, the fund corpus fell to $10.4 billion, the lowest since 1993, from $13.0 billion in the prior quarter.

IberiaBank, based in Lafayette, Louisiana will assume both Florida-based banks' $2.731 billion in deposits. Iberiabank also entered into a loss-share agreement with the FDIC on $656 million of Century Bank's assets and on $1.9 billion of Orion Bank's assets.

Tustin, California-based Sunwest Bank will assume all of Pacific Coast National Bank's deposits and essentially all of its assets.

In the second quarter of 2009, the number of banks on the FDIC's list of problem institutions grew to 416 from 305 in the first quarter. This is the highest since the savings and loan crisis in 1994.   Increasing loan losses on commercial real estate are expected to cause hundreds more bank failures in the next few years. The FDIC anticipates the bank failures to cost about $100 billion over the next four years.

In order to replenish the declining fund, the FDIC board recently mandated the U.S. banks to pay fees for three years in advance. Also, the regulators are considering requesting the healthy banks to bail out the government soon as it is necessary to replenish the deposit insurance fund, which has slipped to 0.22% of insured deposits, below the mandated minimum of 1.15%. The FDIC also has access to the Treasury Department credit line of up to $500 billion.

The failure of Washington Mutual last year was the largest in U.S. banking history. It was acquired by JPMorgan Chase (JPM). The other major acquirers of failed institutions since 2008 include Fifth Third Bancorp (FITB), Zions Bancorp (ZION), SunTrust Banks (STI) and PNC Financial (PNC).

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com

Zacks Investment Research

Bank Failures Rise to 123 – Analyst Blog

Zacks Market Commentaries — Mon, 16 Nov 2009 14:01:28 +0000

Regulators shut down 2 banks in Florida and 1 in California; U.S. bank failures reach 123 this year.

U.S. regulators on Friday shuttered two more banks in Florida and one in California. Though there are some early signs of economic recovery, bank failures continue unabated. This takes the total number of bank failures to 123, compared to 25 in 2008 and 3 in 2007.

The weak economy continues to weigh heavily on banks with a stream of loan defaults. As the industry has to tolerate bad loans that were made during the credit explosion, the trouble in the banking system goes even deeper, increasing the possibility of more bank failures. However, the regulators are trying to avoid panic by seizing banks slowly. Also, the slow seizing could be a strategy as it is hard to get buyers for so many failed banks.

The failed banks were -- Century Bank, FSB of Sarasota, Florida with $728 million in assets and $631 million in deposits, Orion Bank of Naples, Florida with about $2.7 billion in assets and $2.1 billion in deposits and Pacific Coast National Bank of San Clemente, California with $134.4 million in assets and $130.9 million in deposits.

These bank failures represent another sizable impact on the Federal Deposit Insurance Corporation’s (FDIC) fund for protecting customer accounts, as it has been appointed receiver for these banks. The failure of Century Bank is expected to cost the deposit insurance fund about $344 million, Orion Bank’s failure will cost about $615 million and the failure of Pacific Coast National Bank is expected to cost about $27.4 million.

The FDIC insures deposits at 8,195 institutions with roughly $13.5 trillion in assets. When a bank fails, it reimburses customers for deposits of up to $250,000 per account. The outbreak of bank failures has significantly stretched the regulator’s deposit insurance fund. At Jun 30, 2009, the fund corpus fell to $10.4 billion, the lowest since 1993, from $13.0 billion in the prior quarter.

IberiaBank, based in Lafayette, Louisiana will assume both Florida-based banks' $2.731 billion in deposits. Iberiabank also entered into a loss-share agreement with the FDIC on $656 million of Century Bank's assets and on $1.9 billion of Orion Bank's assets.

Tustin, California-based Sunwest Bank will assume all of Pacific Coast National Bank's deposits and essentially all of its assets.

In the second quarter of 2009, the number of banks on the FDIC's list of problem institutions grew to 416 from 305 in the first quarter. This is the highest since the savings and loan crisis in 1994.   Increasing loan losses on commercial real estate are expected to cause hundreds more bank failures in the next few years. The FDIC anticipates the bank failures to cost about $100 billion over the next four years.

In order to replenish the declining fund, the FDIC board recently mandated the U.S. banks to pay fees for three years in advance. Also, the regulators are considering requesting the healthy banks to bail out the government soon as it is necessary to replenish the deposit insurance fund, which has slipped to 0.22% of insured deposits, below the mandated minimum of 1.15%. The FDIC also has access to the Treasury Department credit line of up to $500 billion.

The failure of Washington Mutual last year was the largest in U.S. banking history. It was acquired by JPMorgan Chase (JPM). The other major acquirers of failed institutions since 2008 include Fifth Third Bancorp (FITB), U.S. Bancorp, Zions Bancorp (ZION), SunTrust Banks (STI), PNC Financial (PNC), BB&T Corporation (BBT) and Regions Financial (RF).

The failed banks are victims of recession and rising loan losses. As a result of the ongoing market turmoil, these institutions experienced massive capital erosion stemming from losses due to a significant exposure to collateralized mortgage obligations, commercial real estate loans and other commercial and industrial loans. All these factors were responsible for a drag on profitability and write-downs.  

According to the FDIC, the bank failures have cost the federal deposit insurance fund more than $28 billion so far this year. Though current signals indicate that the economy may stabilize, we expect loan losses on commercial real estate portfolio to remain high for banks that hold large amounts of high-risk loans.
Read the full analyst report on "JPM"
Read the full analyst report on "FITB"
Read the full analyst report on "ZION"
Read the full analyst report on "STI"
Read the full analyst report on "PNC"
Read the full analyst report on "BBT"
Read the full analyst report on ""
Zacks Investment Research

Bank Failure Tally Reaches 120 – Analyst Blog

Zacks Market Commentaries — Mon, 09 Nov 2009 14:00:26 +0000

Regulators shut down 5 more banks in Georgia, Michigan, Minnesota, Missouri and California; tally hits 120 so far this year

U.S. regulators on Friday shuttered five more institutions in Georgia, Michigan, Minnesota, Missouri and California , as the recession continues to take its toll on banks. This takes the total number to 120, compared to 25 in 2008 and 3 in 2007.

As the industry has to tolerate bad loans that were made during the credit explosion, the trouble in the banking system goes even deeper, increasing the possibility of more failures. However, the regulators are trying to avoid panic by seizing banks slowly. Also, the slow pace of seizing could be a strategy as it is hard to get buyers for so many failed banks.

The failed banks were -- Georgia-based United Security Bank of Sparta with total assets of $157 million and total deposits of approximately $150 million, Michigan-based Home Federal Savings Bank of Detroit with total assets of $14.9 million and total deposits of approximately $12.8 million, Minnesota-based Prosperan Bank of Oakdale with total assets of $199.5 million and total deposits of approximately $175.6 million, Missouri-based Gateway Bank of St. Louis with total assets of $27.7 million and total deposits of approximately $27.9 million and California-based United Commercial Bank of San Francisco with total assets of $11.2 billion and total deposits of approximately $7.5 billion.

Failure of these institutions represents another sizable impact on the Federal Deposit Insurance Corporation’s (FDIC) fund for protecting customer accounts, as it has been appointed receiver for these banks. The failure of United Commercial Bank alone is expected to cost the federal deposit insurance fund approximately $1.4 billion. The other failures are expected to cost the deposit insurance fund a combined $132.7 million.  

The FDIC insures deposits at 8,195 institutions with roughly $13.5 trillion in assets. When a bank fails, it reimburses customers for deposits of up to $250,000 per account. The outbreak of financial institutions failing has significantly stretched the regulator’s deposit insurance fund.

At Jun 30, 2009, the fund corpus fell to $10.4 billion, the lowest since 1993, from $13.0 billion in the prior quarter. However, the FDIC has billions of loss reserves apart from the insurance fund and it can access a Treasury credit line of up to $500 billion.

The FDIC entered into a purchase and assumption agreement with Ameris Bank, Moultrie, Georgia, to assume all of the deposits of United Security Bank; Liberty Bank and Trust Company, New Orleans, Louisiana, to assume all of the deposits of Home Federal Savings Bank; Alerus Financial, National Association, Grand Forks, North Dakota, to assume all of the deposits of Prosperan Bank; Central Bank of Kansas City to assume all of the deposits of Gateway Bank of St. Louis; and East West Bank, Pasadena, California, to assume all of the deposits of United Commercial Bank.

In order to replenish the declining fund, the FDIC board recently proposed that approximately 8,100 insured U.S. banks and savings institutions should pay fees for three years in advance. Also, the regulators are considering requesting the healthy banks to bail out the government as soon as it is necessary to replenish the deposit insurance fund, which has slipped to 0.22% of insured deposits, below the mandated minimum of 1.15%.  

In the second quarter of 2009, the number of banks on the FDIC's list of problem institutions grew to 416 from 305 in the first quarter. This is the highest since the savings and loan crisis in 1994. Increasing loan losses on commercial real estate are expected to cause hundreds more bank failures in the next few years. The FDIC anticipates the bank failures to cost about $100 billion over the next four years.  

The failure of Washington Mutual last year was the largest in U.S. history. It was acquired by JP Morgan Chase (JPM). The other major acquirers of failed institutions since 2008 include Fifth Third Bancorp (FITB), U.S. Bancorp (USB), Zions Bancorp (ZION), SunTrust Banks (STI), PNC Financial (PNC), BB&T Corporation (BBT) and Regions Financial (RF).  

The failed banks are victims of recession and rising loan losses. As a result of the ongoing market turmoil, these institutions experienced massive capital erosion stemming from losses due to a significant exposure to collateralized mortgage obligations, commercial real estate loans and other commercial and industrial loans. All these factors were responsible for a drag on profitability and write-downs.

According to the FDIC, the U.S. banks overall lost $3.7 billion in the second quarter of 2009, compared to a profit of $7.6 billion in the prior quarter. Though there are some signs of economic recovery, we expect loan losses on commercial real estate portfolio to remain high for banks that hold large amounts of high-risk loans.
Read the full analyst report on "JPM"
Read the full analyst report on "FITB"
Read the full analyst report on "USB"
Read the full analyst report on "ZION"
Read the full analyst report on "STI"
Read the full analyst report on "PNC"
Read the full analyst report on "BBT"
Read the full analyst report on "RF"
Zacks Investment Research

DrStockPick.com Stock Report! 11/05/09, DAKT, PSFT, COKE, CPWM, FCNCA, SCOR

Dr. Stock Pick — Thu, 05 Nov 2009 19:21:43 +0000

Dr Stock Pick HOT News & Alerts! _______________________________________ FREE Daily Stock Alerts From DrStockPick.com _______________________________________ Thursday November 5, 2009 DrStockPick.com Stock Report! ************************************************************** PowerSafe Technology Corporation (PSFT.PK) subsidiary Amplification Technologies Inc. (www.amplificationtechnologies.com) (ATI), is offering higher performance thermoelectrically cooled discrete amplification single photon counting solid state photodetectors. These photodetectors are mounted on a two stage thermoelectric cooler inside [...]

Regions Joins TAG Program – Analyst Blog

Zacks Market Commentaries — Tue, 03 Nov 2009 21:30:43 +0000

Regions Financial (RF) will participate in the Federal Deposit Insurance Corporation’s (FDIC) Transaction Account Guarantee (TAG) Program. Under this program, through June 30, 2010, all non-interest-bearing transaction accounts will be fully guaranteed by the FDIC for the entire amount in the account. Coverage under the TAG is in addition to and separate from the coverage available under the FDIC’s general deposit insurance rules.

The TAG was established in Oct. 2008 as part of the FDIC’s Temporary Liquidity Program. The program offered insured institutions the ability to receive unlimited deposit insurance coverage for funds held in qualifying non-interest-bearing transaction accounts. The TAG was intended to facilitate liquidity and stability in view of the economic crisis of late 2008 and 2009.

The TAG was scheduled to expire on Dec 31, 2009, but the FDIC has decided to extend the program for an additional six months. While noting evidence that confidence in the banking system has improved recently, the FDIC board believes that an extension is necessary to provide an orderly phase-out of the program.

In addition to extending the expiration date of the TAG program, the FDIC’s final rule (1) increases the assessment fee for participation; and (2) provides an opportunity for participating institutions to opt out of the program as of Jan. 1, 2010.

Regions' participation in the TAG program will provide support to the bank, which has been affected by the recent financial and economic turmoil. Beginning Jan. 1, 2010, Region will be subject to increased quarterly fees due to its participation in the TAG program.

During the third quarter, Regions Financial reported a loss of $437 million or 37 cents per share, compared with net income of $79.5 million or 11 cents per share in the year-ago period. Regions opened a record 270,000 new retail and business checking accounts, up 29% versus the same quarter last year.

The FDIC’s TAG instills a sense of security among the customers. The bank opened a total of 0.8 million of new accounts for the first nine months of 2009. It appears on track to achieve the goal of adding 1 million new accounts by the end of this program.
Read the full analyst report on "RF"
Zacks Investment Research

Zacks Analyst Blog Highlights: U.S. Bancorp, JP Morgan Chase, Fifth Third Bancorp, Zions Bancorp and SunTrust Banks – Press Releases

Zacks Market Commentaries — Tue, 03 Nov 2009 11:30:33 +0000

For Immediate Release

Chicago, IL – November 3, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: U.S. Bancorp (USB), JP Morgan Chase (JPM), Fifth Third Bancorp (FITB), Zions Bancorp (ZION) and SunTrust Banks (STI).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Monday’s AnalystBlog:

Bank Failures Zoom to 115

The nine banks had 153 offices, out of which California National Bank had 68 branches. California National Bank was the biggest of FBOP's banks, the nation's 101st largest with assets of $7.1 billion.

Failure of these institutions represents another impact on the Federal Deposit Insurance Corporation's (FDIC) fund for protecting customer accounts, as it has been appointed receiver for these banks. The failure of 115 banks has cost the federal deposit insurance fund more than $25 billion so far this year. The FDIC insures deposits at 8,195 institutions with roughly $13.5 trillion in assets.

When a bank fails, it reimburses customers for deposits of up to $250,000 per account. The outbreak of financial institutions failing has significantly stretched the regulator's deposit insurance fund. As on June 30, 2009, the fund corpus fell to $10.4 billion, the lowest since 1993, from $13.0 billion in the prior quarter.

Minneapolis-based U.S. Bank, a division of U.S. Bancorp (USB), has agreed to assume the deposits and most of the assets of these nine banks. The FDIC and U.S. Bank agreed to share losses on about $14.4 billion of the combined purchased assets.

In the second quarter of 2009, the number of banks on the FDIC's list of problem institutions grew to 416 from 305 in the first quarter. This is the highest since the savings and loan crisis in 1994.

Increasing loan losses on commercial real estate are expected to cause hundreds more bank failures in the next few years. The FDIC anticipates the bank failures to cost about $100 billion over the next four years.

In order to replenish the declining fund, the FDIC board recently proposed that the U.S. banks should pay fees for three years in advance. Also, the regulators are considering requesting the healthy banks to bail out the government soon as it is necessary to replenish the deposit insurance fund, which has slipped to 0.22% of insured deposits, below the mandated minimum of 1.15%.

The failure of Washington Mutual last year was the largest in U.S. history. It was acquired by JP Morgan Chase (JPM). The other major acquirers of failed institutions since 2008 include Fifth Third Bancorp (FITB), U.S. Bancorp, Zions Bancorp (ZION), SunTrust Banks (STI), among others.

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com

Zacks Investment Research

Improving financial regulation and supervision

James Hamilton — Wed, 28 Oct 2009 03:03:58 +0000

There were some other very interesting presentations at the conference hosted by the Federal Reserve Bank of Boston last week. Fed Chair Ben Bernanke spoke on Financial Regulation and Supervision after the Crisis while Princeton Professor Alan Blinder's message was It's Broke, Let's Fix It: Rethinking Financial Regulation. Here I summarize four key reforms these speakers addressed.

(1) Capital adequacy. The key principle for preventing the "bank run" dynamics of the recent financial turmoil is to make sure that financial institutions have a sufficient cushion of equity capital to be able to absorb liquidation and delinquency losses on assets without sacrificing the institution's ability to repay short-term creditors. Equity capital is also a critical tool for addressing the core incentive problems arising from gambling with other people's money. As Chair Bernanke observed:

Through the course of the crisis, it became increasingly clear that many firms lacked adequate capital and liquidity to protect themselves as well as the financial system as a whole.

Professor Blinder elaborated:

the real leverage problems arose with (a) investment banks that operated (under a different regulatory regime [from commercial banks]) with 30 times leverage and more, and (b) gimmicks such as thinly-capitalized SIVs and conduits that (legally) avoided capital requirements...

Both Bernanke and Blinder further called attention to the problems with procyclical capital requirements. Standard capital requirements become looser when times are good, but that is exactly when it's most feasible and desirable for them to strengthen the equity cushion. Blinder advocated reverse convertible debentures proposed by Mark Flannery and the Squam Lake Working Group on Financial Regulation as a way to implement countercyclical capital requirements.

Though a conceptually different issue from equity capital, Blinder also favored requiring both mortgage originators and mortgage securitizers to retain 5% of any assets they create.

(2) Compensation. Blinder observed: "Pay plans that are structured in such a 'heads I win, tails I don't lose' way create powerful incentives for traders to go for broke gambling with OPM ('other people's money')." In his spoken remarks he added, "They did go for broke, and a lot of them achieved that objective."

Here were Bernanke's observations on the subject:

flawed compensation practices at financial institutions also contributed to the crisis. Compensation, not only at the top but throughout a banking organization, should appropriately link pay to performance and provide sound incentives. In particular, compensation plans that encourage, even inadvertently, excessive risk-taking can pose a threat to safety and soundness. The Federal Reserve has just issued proposed guidance that would require banking organizations to review their compensation practices to ensure they do not encourage excessive risk-taking, are subject to effective controls and risk management, and are supported by strong corporate governance including board-level oversight.

(3) Derivatives. Though Bernanke did not say much about the explosion of financial instruments such as credit default swaps and their role in propagating the crisis, Blinder highlighted the desirability of changes:

While the regulation of derivatives is fraught with peril, it is not hard to improve upon what we have now-- which is practically nothing. I have argued for years that the most important step the government could take would be to push as much derivatives trading as possible into organized exchanges....

The Treasury White Paper (p. 48) proposes to subject OTC derivatives to a "robust regime" of regulation that includes "conservative capital requirements," margins, reporting requirements, and "business conduct standards."

(4) Resolution mechanism. Finally, both Bernanke and Blinder stressed the need for a mechanism to supervise the liquidation of failing systemically important financial institutions. Blinder advocated:

we could develop a new resolution mechanism, perhaps patterned on what the FDIC now does with small banks (often before the bank's net worth goes negative), that would enable the authorities to wind down a systemically-important financial institution (including a non-bank) in an orderly fashion-- rather than just throwing it to the Chapter 11 wolves. This last idea is among the key ingredients of the Treasury's reform plan, has substantial support in Congress, and may well become law. If so, it would have several desirable effects.

The TBTF doctrine would morph into “too big to be put into Chapter 11," but not "too big to be seized and its management thrown out." That change alone would go a long way toward reducing moral hazard.

Taxpayers would (mostly) be relieved of the burdens of costly bailouts....

Regulators would no longer have to keep large "zombie banks" (and non-banks) on life support for fear of the systemic consequences of shutting them down.

Bernanke endorsed this reform as well:

the Congress should create a new set of authorities to facilitate the orderly resolution of failing, systemically important financial firms.... In light of the experience of the past year, it is clear that we need an option other than bankruptcy or bailout for such firms.

A new resolution regime for nonbanks, analogous to the regime currently used by the Federal Deposit Insurance Corporation for banks, would permit the government to wind down a failing systemically important firm in a way that reduces the risks to financial stability and the economy. Importantly, to restore a meaningful degree of market discipline and to address the too-big-to-fail problem, it is essential that there be a credible process for imposing losses on the shareholders and creditors of the firm. Any resolution costs incurred by the government should be paid through an assessment on the financial industry and not borne by the taxpayers.

One detail I'd stress is the need for integration of the approaches to items (3) and (4) above. One of the problems that makes bankruptcy messy for these institutions is that outstanding derivatives contracts can assume a life of their own, sucking assets out of the firm as the market moves against the firm's bets and in practice giving these contracts seniority over conventional debt. From the perspective of society's best interests I don't think such seniority can be justified. I agree with the assertion in Blinder's spoken remarks that the economic costs of the latest recession exceed the cumulative potential efficiency benefits of what he referred to as "fancy finance."

I would propose that instruments such as the credit default swaps entered into by any systemically important financial institution should be subject to a regulatory stop-loss provision. In a standard clearinghouse mechanism, each party delivers collateral against the possibility of the market moving against their original bet. If the market moves too much, the loser either must add collateral or their position is wiped out. If the institution continues to deliver new margin capital, it can become like the compulsive gambler doubling down as the firm's equity cushion essential for financial stability bleeds away. Like the referee protecting a staggering boxer, the regulator needs the authority to declare "no mas" on an institution's commitment of new capital to such positions.

Bernanke concluded with the following:

we cannot lose sight of the need to reorient our supervisory approach and to strengthen our regulatory and legal framework to help prevent a recurrence of the events of the past two years.

To which I would only add, Amen!

Pacific Premier Bancorp, Inc. (PPBI) Reports Small Loss in Third Quarter

QualityStocks — Wed, 21 Oct 2009 14:40:50 +0000

Pacific Premier Bancorp, Inc. reported a net loss of $7,000, or $0.01 per share, in its third quarter ending 9/30/2009. The company earned $1 million, or $0.16 per share, in the same quarter last year. Pacific Premier Bancorp, Inc. attributed the loss to a $1.3 million increase in the provision for loan losses, and [...]

Zacks Analyst Blog Highlights: CVB Financial, JP Morgan Chase, Fifth Third Bancorp, U.S. Bancorp and Zions Bancorp – Press Releases

Zacks Market Commentaries — Tue, 20 Oct 2009 12:00:38 +0000

For Immediate Release

Chicago, IL – October 20, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: CVB Financial (CVBF), JP Morgan Chase (JPM), Fifth Third Bancorp (FITB), U.S. Bancorp (USB) and Zions Bancorp (ZION).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Monday’s AnalystBlog:

U.S. Bank Failures Reach 99 in ‘09

The failure of San Joaquin Bank represents another impact on the Federal Deposit Insurance Corporation’s (FDIC) fund for protecting customer accounts as it has been appointed receiver for the bank. The bank failure is expected to cost the deposit insurance fund an estimated $103 million.

The FDIC insures deposits at 8,195 institutions with roughly $13.5 trillion in assets. When a bank fails, it reimburses customers for deposits of up to $250,000 per account. The outbreak of financial institution failures has significantly stretched the regulator’s deposit insurance fund. At June 30, 2009, the fund corpus fell to $10.4 billion, the lowest since 1993, from $13.0 billion in the prior quarter.

Ontario, California-based Citizens Business Bank, a subsidiary of CVB Financial (CVBF), will assume all of the deposits of San Joaquin Bank. So there will be no losses to any depositor.

In order to replenish the declining fund, the FDIC board recently proposed that the U.S. banks should pay fees for three years in advance. Also, the regulators are considering requesting the healthy banks to bail out the government as soon as it is necessary to replenish the deposit insurance fund, which has slipped to 0.22% of insured deposits, below the mandated minimum of 1.15%.

In the second quarter of 2009, the number of banks on the FDIC's list of problem institutions grew to 416 from 305 in the first quarter. This is the highest since the savings and loan crisis in 1994. Increasing loan losses on commercial real estate are expected to cause hundreds more bank failures in the next few years. The FDIC anticipates the bank failures to cost about $70 billion over the next five years.

The failure of Washington Mutual last year was the largest in the U.S. history. It was acquired by JP Morgan Chase (JPM). The other major acquirers of failed institutions since 2008 include Fifth Third Bancorp (FITB), U.S. Bancorp (USB), Zions Bancorp (ZION) and several others.

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com

Zacks Investment Research

U.S. Bank Failures Reach 99 in ‘09 – Analyst Blog

Zacks Market Commentaries — Mon, 19 Oct 2009 14:01:27 +0000

U.S. bank failures continue unabated as U.S. regulators on Friday closed down San Joaquin Bank of Bakersfield, CA. This takes the total number of failed federally insured banks to 99 in 2009, compared to 25 in 2008 and 3 in 2007.

As of September 29, San Joaquin Bank, a subsidiary of San Joaquin Bancorp, had about $775 million in assets, $631 million in deposits and 5 branches. The bank had not been included in a previous list of 89 institutions that were undercapitalized as of March 31. But its first quarter amended filing showed that there were additional loan charge-offs and a higher net loss.

As of June 30, San Joaquin Bank’s Tier 1 leverage ratio was 4.12% and the total risk-based capital ratio was 6.70%. Though the Tier 1 leverage ratio was above the minimum level of 4% considered adequately capitalized, its total risk-based capital ratio was well below the minimum level of 8%.

The failure of San Joaquin Bank represents another impact on the Federal Deposit Insurance Corporation’s (FDIC) fund for protecting customer accounts as it has been appointed receiver for the bank. The bank failure is expected to cost the deposit insurance fund an estimated $103 million.

The FDIC insures deposits at 8,195 institutions with roughly $13.5 trillion in assets. When a bank fails, it reimburses customers for deposits of up to $250,000 per account. The outbreak of financial institution failures has significantly stretched the regulator’s deposit insurance fund. At June 30, 2009, the fund corpus fell to $10.4 billion, the lowest since 1993, from $13.0 billion in the prior quarter.

Ontario, California-based Citizens Business Bank, a subsidiary of CVB Financial (CVBF), will assume all of the deposits of San Joaquin Bank. So there will be no losses to any depositor.

In order to replenish the declining fund, the FDIC board recently proposed that the U.S. banks should pay fees for three years in advance. Also, the regulators are considering requesting the healthy banks to bail out the government as soon as it is necessary to replenish the deposit insurance fund, which has slipped to 0.22% of insured deposits, below the mandated minimum of 1.15%.

In the second quarter of 2009, the number of banks on the FDIC's list of problem institutions grew to 416 from 305 in the first quarter. This is the highest since the savings and loan crisis in 1994. Increasing loan losses on commercial real estate are expected to cause hundreds more bank failures in the next few years. The FDIC anticipates the bank failures to cost about $70 billion over the next five years.

The failure of Washington Mutual last year was the largest in the U.S. history. It was acquired by JP Morgan Chase (JPM). The other major acquirers of failed institutions since 2008 include Fifth Third Bancorp (FITB), U.S. Bancorp (USB), Zions Bancorp (ZION), SunTrust Banks (STI), PNC Financial (PNC), BB&T Corporation (BBT) and Regions Financial (RF).

The failed banks are victims of recession and rising loan losses. As a result of the ongoing market turmoil, these institutions experienced massive capital erosion stemming from losses due to a significant exposure to collateralized mortgage obligations, commercial real estate loans and other commercial and industrial loans. All these factors were responsible for a drag on profitability and write-downs.

According to the FDIC, the U.S. banks overall lost $3.7 billion in the second quarter of 2009, compared to a profit of $7.6 billion in the prior quarter.  Though current signals indicate that the economy may stabilize, we expect loan losses on commercial real estate portfolio to remain high for banks that hold large amounts of high-risk loans.
Read the full analyst report on "CVBF"
Read the full analyst report on "JPM"
Read the full analyst report on "FITB"
Read the full analyst report on "USB"
Read the full analyst report on "ZION"
Read the full analyst report on "STI"
Read the full analyst report on "PNC"
Read the full analyst report on "BBT"
Read the full analyst report on "RF"
Zacks Investment Research

Feedback from Buttonwood Gathering

Prieur du Plessis — Mon, 19 Oct 2009 08:12:12 +0000

The Buttonwood Gathering, a conference bringing together global regulators and bankers to discuss and debate new ideas and develop a new set of guidelines moving forward, has just taken place. Michael Panzer, writer of the Financial Armageddon blog, was in attendance and has kindly shared some of the more interesting quotes on his blog, as reported in this post.

USB to Acquire a Part of BB&T – Analyst Blog

Zacks Market Commentaries — Thu, 15 Oct 2009 17:00:11 +0000

U.S. Bancorp (USB) has signed a deal with BB&T Corp. (BBT) to acquire the latter’s banking operations in Nevada . As per the agreement, U.S. Bank National Association, U.S. Bancorp’s lead bank, will purchase about $800 million in deposits and certain branches of BB&T’s Nevada banking operations.

The deal is subject to regulatory approval and is expected to close in early 2010. The acquisition involves deposits of those branches that BB&T had recently acquired from the Federal Deposit Insurance Corporation (FDIC) as receiver for Colonial Bank.

The purchase will fortify U.S. Bancorp’s business in Nevada . The company expects this acquisition to meet or exceed the company’s internal rate of return and earnings per share accretion targets.

Last week, US Bancorp has announced that its lead bank, U.S. Bank, has agreed to buy the bond trustee business of First Citizens Bank, a subsidiary of First Citizens BancShares Inc. (FCNCA). The purchase aids growth of its corporate banking and fixed income business in the southeast market. Also it complements the bank’s existing bond trustee business in North Carolina , South Carolina and Virginia .

Earlier that week, US Bancorp also announced its acquisition of the mutual fund administration and accounting servicing division of Fiduciary Management Inc. While this acquisition will confer additional compliance, technology and accounting talent for U.S. Bancorp Fund Services, the company will also benefit from contact with Fiduciary Management’s key client base.

With $266 billion in assets, US Bancorp is the sixth largest commercial bank in the United States . Despite the fact that the company’s second quarter earnings reflected the deteriorating credit quality and its earnings of 12 cents per share were a penny short of the Zacks Consensus Estimate, we have been encouraged by the company’s exit from the Treasury’s Capital Purchase program.

Although the stressed residential real estate market and the issues with the company’s commercial and retail customers will continue to weigh on the shares of US Bancorp, we believe that the recent signs of economic recovery coupled with such strategic acquisitions bode well.

Hence, prior to its third quarter earnings release scheduled on Oct 21, 2009, we have a Neutral recommendation on the shares of US Bancorp.
Read the full analyst report on "USB"
Read the full analyst report on "BBT"
Read the full analyst report on "FCNCA"
Zacks Investment Research

U.S. Banks – Industry Outlook

Zacks Market Commentaries — Tue, 13 Oct 2009 19:19:14 +0000

After enduring extraordinary shocks in 2008, the U.S. banks entered an exceptional state of turmoil in 2009. Starting as a credit issue in the subprime segment of the mortgage market, the sticky situation spread to almost the entire financial services industry, and all corners of the globe. In other words, the financial crisis ultimately morphed into a massive economic crisis, which has had major ramifications across the whole world.

Although the banking industry is dealing with liquidity and confidence challenges, it now has financial support from the U.S. government. The government has taken several steps, including programs offering capital injections and debt guarantees, to stabilize the financial system.

We believe that the worst of the credit crisis is now probably behind us. After almost a year of initiating the $700 billion Troubled Asset Relief Program (TARP), a lot has improved with respect to the economic crisis, but the banking system is not yet out of the woods as there are persistent problems that need to be addressed by the government before shifting the strategy to growth. We believe that the U.S. economy will regain its growth momentum once these issues are resolved.

While the bigger banks benefited greatly from the various programs launched by the government, many smaller banks are still in a very weak financial state and the Federal Deposit Insurance Corporation’s (FDIC) list of problem banks continues to grow. In the second quarter of 2009, the number of banks on the FDIC's list of problem institutions grew to 416 from 305 in the first quarter. This is the highest number since the savings and loan crisis in 1994.

Despite the government’s heavy efforts, we continue to see bank failures. Increasing loan losses on commercial real estate are expected to cause more bank failures in the next few years. The FDIC anticipates the bank failures to cost about $70 billion over the next five years. Furthermore, government efforts have not succeeded in restoring the lending activity at the banks. Lower lending will continue to hurt margins, though the low interest rate environment should be beneficial to the banks with a liability-sensitive balance sheet.

Out of the $240 billion given to banks, $70 billion has come back as the healthiest banks have started repaying TARP funds. The Treasury Secretary estimates that banks will repay another $50 billion over the next 12 to 18 months. Also, taxpayers have received decent returns on many of its financial-sector investments. Repayments under the TARP have generated a 17% annualized return from stock-warrant repurchases and $12 billion in dividend payments from dozens of banks.

Many of the financial institutions that have already repaid the bailout money include JPMorgan Chase (JPM), American Express (AXP), Goldman Sachs (GS), Morgan Stanley (MS), Capital One (COF), BB&T (BBT) and US Bancorp (USB). Also, banks like Bank of America (BAC), Wells Fargo (WFC) and Citigroup (C) are expected to exit TARP over the next 12 to 18 months.

However, the situation is going to be reversed as regulators are considering asking healthy banks to bail out the government soon, in order to replenish the FDIC’s coffers. The increasing number of bank failures has caused a rapid decline in the FDIC’s funds as it has been appointed receiver for the failed banks.

Also, following the U.S. Treasury’s announcement requiring the world’s banks to maintain stronger capital and liquidity standards by the end of next year to prevent a re-run of the global financial crisis, 15 large banks that control the majority of derivative trading worldwide have committed themselves to maintaining greater transparency in the $600 trillion market that needs stricter oversight in the interest of the global financial system.

However, there are lingering concerns related to the banking industry as well as the economy. Continued asset-quality troubles are expected to force many banks to record substantial additional provisions for the remainder of 2009 and all of 2010. This will be a drag on the profitability of many banks for extended periods and will further add stress to their capital levels.

For the last few quarters, the banks have mainly suffered due to the losses in mortgages and Commercial Real Estate (residential construction loans). Housing prices have continued to decline, and given the sharp increase in the level of unemployment we anticipate continued losses in these portfolios.

Furthermore, deterioration in other Commercial Real Estate loans is now rising at a rapid pace and the downturn in this class is also likely to emerge as a major challenge. Given the negative macro backdrop, we expect losses to continue to increase in the other asset classes as well, especially in consumer-related loans.

While the state of the economy is showing signs of recovery, a lot remains to be done. The Treasury continues to have huge direct investments in institutions like American International Group (AIG), Fannie Mae (FNM) and Freddie Mac (FRE).

We expect loan losses on commercial real estate portfolio to remain high for banks that hold large amounts of high-risk loans. Also, as a result of a rise in charge-offs, the levels of reserve coverage have fallen over the past quarters and the banks will have to make higher provisions in the coming quarters, affecting their profitability. We think that the financial crisis is far from over and we have to wait for a while to write the end line of the crisis story.

OPPORTUNITIES

The Treasury’s requirement of focusing banking institutions towards higher-quality capital will help banks absorb big losses. Though this would somewhat limit the profitability of banks, a proper implementation would bring stability to the overall sector and hopefully address bank failures.

We favor Commerce Bancshares Inc. (CBSH) in this space since this company is one of the few names that did not report losses even during the current financial crisis. We believe that Commerce is one of the best capitalized banks in the industry and will generate positive earnings throughout the credit cycle. While the bank had a decent growth in deposits in the most recent quarter, trends in its credit metrics were in the negative direction.    

WEAKNESSES

The financial system is going through massive de-leveraging. Banks in particular have lowered leverage. The implication for banks is that the profitability metrics (like returns on equity and return on assets) will be lower than in recent years. Furthermore, the current crisis has dramatically accelerated the consolidation trend in the industry. As a result, failure of a large financial institution will be a major concern in the upcoming quarters as weaker entities are absorbed by larger ones.

We think banks with high exposure to housing and Commercial Real Estate loans, like Wilmington Trust Corporation (WL), KeyCorp (KEY) and Zions Bancorp (ZION), will remain under pressure.

Zacks Investment Research

AmEx Diversifies Funding – Analyst Blog

Zacks Market Commentaries — Tue, 15 Sep 2009 17:10:24 +0000

On Monday, American Express Co. (AXP) launched a new line of certificates of deposit (CD) in order to diversify its funding sources as the financial crisis has tightened overall lending.

The saving lines are available in a range of maturities from three months to five years. The Federal Deposit Insurance Corporation (FDIC) will insure these saving lines by up to $250,000.

Failing financial institutions have significantly stretched the regulator's deposit insurance fund. The FDIC insures deposits at 8,195 institutions with roughly $13.5 trillion in assets. When a bank fails, it reimburses customers for deposits of up to $250,000 per account. As of June 30, the fund corpus had touched $10.4 billion, the lowest since 1993, from $13 billion in the prior quarter.

Like other credit card issuers, American Express has traditionally arranged its funding through credit card asset-backed securities. But of late, funding from credit card asset-backed securities has been hurt by the financial crisis. As a result, the company needed an alternative source of funding.

American Express is also not strong with respect to retail deposits to fund its operations. This is a competitive disadvantage for the company as many of its peers like JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC) and Citigroup Inc. (C) hold a strong retail deposit base.

In the second quarter, 22% of American Express' funding came from short-term debt, short-term and long-term retail deposits and institutional deposits. The company estimates those sources to represent up to 55% percent of its funding needs in the coming years.

Though the last few quarters benefited from successful re-engineering efforts and a diversified business model, American Express experienced continued weakness in card-member spending and high levels of loan losses. We expect continued benefits from the company's diversification and cost-cutting efforts, but the ongoing global crisis and a strong US dollar will continue to impact the results in the coming quarters. However, the new funding initiative will bring some stability to the company's funding options.

Read the full analyst report on "AXP"
Read the full analyst report on "JPM"
Read the full analyst report on "BAC"
Read the full analyst report on "C"
Zacks Investment Research

Corus Bank Fails – 92 So Far in ‘09 – Analyst Blog

Zacks Market Commentaries — Mon, 14 Sep 2009 13:56:29 +0000

Regulators shut down 3 more banks including Corus; total failed banks in '09 reach 92

Three more banks including Corus Bank NA, a subsidiary of Corus Bankshares (CORS), were shuttered by the U.S. regulators on Friday as the recession continues to take its toll on banks. This takes the total number of failed federally insured banks in this year to 92, compared to 25 in 2008 and 3 in 2007.

Based in Chicago, the Corus Bank was a major lender to condominium, office and hotel projects. Corus is one of the largest banks to fail this year, with about $7 billion in total assets, $7 billion in deposits and 11 branches.

Two other small banks were Lacey, WA-based Venture Bank, with $970 million in assets and $903 million in deposits and Woodbury, MN-based Brickwell Community Bank, with $72 million in assets and $63 million in deposits.

The failure of these institutions represents another sizable impact on the Federal Deposit Insurance Corporation’s (FDIC) fund for protecting customer accounts, as it has been appointed the receiver for these banks. The failure of these three banks is expected to cost the deposit insurance fund an estimated $2 billion. The failure of Corus alone is expected to cost about $1.7 billion.

The FDIC insures deposits at 8,195 institutions with roughly $13.5 trillion in assets. When a bank fails, it reimburses customers for deposits of up to $250,000 per account. The outbreak of failing financial institutions has significantly stretched the regulator’s deposit insurance fund. At Jun 30, 2009, the fund corpus fell to $10.4 billion, the lowest since 1993, from $13.0 billion in the prior quarter.

The FDIC sold all of the deposits and $3 billion of Corus’ assets to MB Financial Bank, a subsidiary of MB Financial (MBFI). Much of Corus' assets are condominium loans backed by developments, and the FDIC is expected to sell them off within the next 30 days. This acquisition follows MB Financial's takeover of the failed InBank of Oak Forest, Illinois, last week.

Raleigh, North Carolina-based First-Citizens Bank & Trust Company will assume all of the deposits and $874 million of the assets of Venture Bank. FDIC and First-Citizens Bank agreed to share losses on about $715 million of Venture Bank’s assets. The FDIC said it will retain the remaining assets for disposal later.

Brickwell's $63 million deposits and all of its $72 million assets have been assumed by Mitchell, South Dakota-based CorTrust Bank.

In the second quarter of 2009, the number of banks on the FDIC's list of problem institutions grew to 416 from 305 in the first quarter. This is the highest since the savings and loan crisis in 1994. Increasing loan losses on commercial real estate are expected to cause hundreds more bank failures in the next few years. The FDIC anticipates the bank failures to cost about $70 billion over the next five years.

Recently, the FDIC allowed private investors to buy failed financial institutions. The regulator’s board voted to reduce the cash that private equity funds must maintain in banks they acquire.

The FDIC has no immediate plans to borrow money from the government to replenish the deposit insurance fund. However, it may increase the fees for U.S. banks this year to strengthen the fund. The agency has already raised $5.6 billion through an added assessment.

On August 14, banking operations of Colonial BancGroup were seized by the FDIC. Colonial’s deposits and assets were sold to BB&T Corporation (BBT). Following this, Guaranty Bank failed on Aug 21. The FDIC sold all of Guaranty Bank’s deposits and $12 billion of the assets to BBVA Compass, the U.S. division of Spain’s second-largest bank Banco Bilbao Vizcaya Argentaria (BBV). Colonial is the largest and Guaranty the second-largest bank failure so far this year, and the sixth and tenth-largest, respectively, in the U.S. history.

The failure of Washington Mutual last year is the largest bank failure in U.S. history. It was acquired by JP Morgan Chase (JPM). The other major acquirers of failed institutions since 2008 include Fifth Third Bancorp (FITB), U.S. Bancorp (USB), Zions Bancorp (ZION), SunTrust Banks (STI), PNC Financial (PNC) and Regions Financial (RF).

The failed banks are the victims of recession and rising loan losses. As a result of the ongoing market turmoil, these institutions experienced massive capital erosion stemming from losses arising from a significant exposure to collateralized mortgage obligations, commercial real estate loans and other commercial and industrial loans. All these factors were responsible for a drag on profitability and write-downs. According to the FDIC, U.S. banks overall lost $3.7 billion in the second quarter of 2009, compared to a profit of $7.6 billion in the prior quarter.

The current year has been difficult for consumers to pay off debt as a result of high unemployment, falling home prices and declining personal wealth.

However, on Thursday, U.S. Treasury Secretary Timothy Geithner said that the government won't provide additional funds to stabilize the financial markets and the government’s economic team has removed a $750 billion line item from the federal budget projections, since it is unlikely to be necessary.

But we think that although the economy is in a far better shape now than a year ago, there are persistent problems which need to be addressed by the government before shifting the strategy to growth. We believe that the U.S. economy will regain the growth momentum once these issues are resolved.

Most of the taxpayer-provided money was provided to financial institutions as these are the backbone of the economy and the primary victims of the recession. However, we continue to face further bank failures.

There are lingering concerns related to the banking industry as well as the economy. As a result, in its latest banking industry update, Moody's Investor Service (MCO) repeated that the U.S. banking system will continue to suffer at least through the end of the next year. We expect loan losses on commercial real estate portfolio to remain high for banks that hold large amounts of high-risk loans.
Read the full analyst report on "CORS"
Read the full analyst report on "MBFI"
Read the full analyst report on "BBT"
Read the full analyst report on "BBV"
Read the full analyst report on "JPM"
Read the full analyst report on "FITB"
Read the full analyst report on "USB"
Read the full analyst report on "ZION"
Read the full analyst report on "ST"
Read the full analyst report on "PNC"
Read the full analyst report on "RF"
Read the full analyst report on "MCO"
Zacks Investment Research

Economy Out of the Woods? – Analyst Blog

Zacks Market Commentaries — Fri, 11 Sep 2009 14:01:38 +0000

After almost a year of initiating the $700 billion Troubled Asset Relief Program (TARP), a lot has improved with respect to the economic crisis.

Though the economy is in far better shape now than a year ago, there are persistent problems which need to be addressed by the government before shifting the strategy to growth. We believe that the U.S. economy will regain the growth momentum once these issues are resolved.

On Thursday, U.S. Treasury Secretary Timothy Geithner said that the government won't provide additional funds to stabilize the financial markets and the government’s economic team has removed a $750 billion line item from the federal budget projections, since it is unlikely to be necessary.

The TARP panel members, however, are not happy as most of the taxpayer-provided money was provided to financial institutions. But this is what was required as financial institutions are the backbone of the economy and they were the primary victims of the recession. However, we continue to see bank failures, with the tally reaching 89 so far this year.

Out of the $240 billion given to banks, $70 billion has come back as the healthiest banks have started repaying TARP funds. The Treasury Secretary estimates that the banks will repay another $50 billion over the next 12 to 18 months. Also, taxpayers have received decent returns on many of its financial-sector investments. TARP repayments have generated a 17% annualized return from stock-warrant repurchases and $12 billion in dividend payments from dozens of banks.

Many of the financial institutions that have already repaid bailout money include JPMorgan Chase (JPM), American Express (AXP), Goldman Sachs (GS), Morgan Stanley (MS), Capital One (COF), BB&T (BBT) and US Bancorp (USB). Also, banks like Bank of America (BAC), Wells Fargo (WFC) and Citigroup (C) are expected to exit from TARP over the next 12 to 18 months.

Earlier on Thursday, The Federal Deposit Insurance Corporation (FDIC) said that it may offer a six-month emergency extension to its debt-guarantee component of the Temporary Liquidity Guarantee Program (TLGP) that guarantees more than $270 billion of debt sold by U.S. banks.

The FDIC is considering two alternatives. Under the first, as planned, the program would expire Oct. 31 with the FDIC's guarantee for such debt issued through the program expiring before Dec 31, 2012. According to the second alternative, the debt guarantee program will end Oct. 31, but for an emergency the FDIC would extend the guarantee facility by six months. The proposed extension is intended to address emergency circumstances for insured depository institutions and some other entities participating in the program.

In our view, though the domestic credit and liquidity markets appear to be normalizing, an extension of the debt guarantee facility will be helpful to speed up the complete recovery process.

However, there are lingering concerns related to the banking industry as well as the economy. In its latest banking industry update Moody's Investor Service (MCO) repeated Thursday that the U.S. banking system will continue to suffer at least through the end of next year.

The ratings agency maintains a negative outlook for the banking industry. The agency cited that asset-quality troubles will force many banks to record substantial additional provisions for the remainder of 2009 and all of 2010, which will be a drag on the profitability of many banks for extended periods. This will further add stress to their capital levels.

While the state of the economy is showing signs of recovery, a lot remains to be done. The Treasury continues to have huge direct investments in banks like American International Group (AIG), Fannie Mae (FNM) and Freddie Mac (FRE). Also, as unemployment, housing and consumer spending remain stretched and masses of bank debt are going bad.
Read the full analyst report on "JPM"
Read the full analyst report on "AXP"
Read the full analyst report on "GS"
Read the full analyst report on "MS"
Read the full analyst report on "COF"
Read the full analyst report on "BBT"
Read the full analyst report on "USB"
Read the full analyst report on "BAC"
Read the full analyst report on "WFC"
Read the full analyst report on "C"
Read the full analyst report on "AIG"
Read the full analyst report on "FRE"
Read the full analyst report on "FNM"
Zacks Investment Research

BofA Retains Top Rank – Analyst Blog

Zacks Market Commentaries — Thu, 03 Sep 2009 15:59:57 +0000

Based on a ranking analysis released on Wednesday by Virginia-based research firm SNL Financial, Bank of America Corporation (BAC) still remains the highest ranked banking institution in U.S. by second-quarter total assets.

The analysis was based on the filings of Federal Deposit Insurance Corporation (FDIC). According to the filing, as of June 30, 2009, Bank of America has total assets of $2.3 trillion and total deposits of $971 billion.

Earlier this week, Bank of America offered to repay a part of the $45 billion it had received from the U.S. government in relation to its participation in the Troubled Asset Relief Program (TARP). Also, the repayment offer was aimed to end a loss-sharing deal with the government related to its acquisition of Merrill Lynch & Co. The completion of the payments would enable Bank of America to reduce part of government involvement in its affairs.

We think that Bank of America is in a relatively good shape from a capital perspective. During this delicate period of market stress, the availability of significant private-sector capital is very limited. As a result, the management remains focused on managing asset-levels efficiently, ensuring the deployment of TARP funds to core lending businesses and trimming other assets in non-core businesses.

Also, management seems to derive confidence from its capital position in its indication to pay back a portion of TARP funds.

Though bank failures across the country have pushed several big banks up the ranks, the top nine banking institutions have retained their ranking from the first quarter.

JPMorgan Chase & Co. (JPM) retained the second place with assets of $2 trillion and deposits $866 billion, while Citigroup Inc. (C) is third with assets of $1.8 trillion and deposits of $804 billion. Wells Fargo & Co. (WFC) came in fourth with $1.2 trillion in assets and $813 billion in deposits. HSBC North America Holdings ranked five with $383 billion in assets and $150.6 billion in deposits.

Remarkably, BB&T Corporation (BBT) jumped two steps higher in the second quarter to rank 10th after its acquisition of failed institution Colonial Bank in mid-August. BB&T had total assets of $174 billion.

Another remarkable jump was made by BBVA USA Bancshares Inc. This holding company jumped four spots to rank 23rd as a result of its acquisition of Guaranty Bank, which was also shuttered by the FDIC in mid-August. Despite the turmoil, the major institutions have been able to hold on to their ranks in the last two quarters.
Read the full analyst report on "BAC"
Read the full analyst report on "JPM"
Read the full analyst report on "C"
Read the full analyst report on "BBT"
Read the full analyst report on "WFC"
Zacks Investment Research

Bank Failures Continue – Analyst Blog

Zacks Market Commentaries — Mon, 31 Aug 2009 14:01:03 +0000

Three more U.S. banks failed; tally reaches 84 this year

Bank failures continue unabated as U.S. regulators on Friday closed down three more banks in California, Maryland and Minnesota. This takes the total number of failed federally insured banks this year to 84, compared to 25 in 2008 and 3 in 2007.

The failed banks were Ventura, California-based Affinity Bank, with about $1 billion in assets and $922 million in deposits; Baltimore-based Bradford Bank, with $452 million in assets and $383 million in deposits; and Forest Lake, Minnesota-based Mainstreet Bank, with $459 million in assets and $434 million in deposits.

Failure of these banks represents another sizable impact on the Federal Deposit Insurance Corporation’s (FDIC) fund for protecting customer accounts, as it has been appointed receiver for these banks. The failure of Affinity Bank is expected to cost the deposit insurance fund an estimated $254 million; that of Bradford Bank about $97 million and that of Mainstreet Bank about $95 million.

The FDIC insures deposits at 8,195 institutions with roughly $13.5 trillion in assets and when a bank fails, it reimburses customers for deposits of up to $250,000 per account. The outbreak of failing financial institutions has significantly stretched the regulator’s deposit insurance fund. At June 30, 2009, the fund corpus fell to $10.4 billion, the lowest since 1993, from $13.0 billion in the prior quarter.

San Diego-based Pacific Western Bank has agreed to acquire the deposits and assets of Affinity Bank. The FDIC and Pacific Western agreed to share losses on about $934 million of Affinity's loans and other assets.

Buffalo, New York-based Manufacturers and Traders Trust Company (M&T) has agreed to assume the deposits and assets of Bradford Bank. The FDIC will share losses on about $338 million of Bradford Bank's loans and other assets with M&T.

Stillwater, Minnesota-based Central Bank will acquire the deposits and assets of Mainstreet Bank. The FDIC will share losses on about $268 million of Mainstreet Bank's loans and other assets with Central Bank.

In the second quarter of 2009, the number of banks on the FDIC's list of problem institutions grew to 416 from 305 in the first quarter. This is the highest number since the savings and loan crisis in 1994. The FDIC anticipates U.S. bank failures to cost $70 billion through 2013.

According to the FDIC Chairman, the agency has no immediate plans to borrow money from the government to replenish the deposit insurance fund. However, the FDIC may impose an additional fee on U.S. banks this year to bolster the fund. The agency has already raised $5.6 billion through an added assessment.

In large, the failures are concentrated among newer companies. To address this issue, the FDIC said Friday that it is extending the term for maintaining higher capital levels for new banks to seven years from three years. During this period, the banks will face more frequent examinations.

Earlier this month, banking operations of Colonial BancGroup was seized by the FDIC. Colonial’s deposits and assets were sold to BB&T Corporation (BBT). Following this, Guaranty Bank failed on August 21. The FDIC sold all of Guaranty Bank’s deposits and $12 billion of the assets to BBVA Compass, the U.S. division of Spain’s second-largest bank Banco Bilbao Vizcaya Argentaria (BBV). Colonial is the largest and Guaranty the second-largest bank failure so far this year, and the 6th-largest and 10th-largest, respectively, in U.S. history. Guaranty was about half the size of Colonial Bank.

The failure of Washington Mutual last year is the largest bank failure in U.S. history. It was acquired by JPMorgan Chase (JPM). The other major acquirers of failed institutions during 2008 and 2009 include Fifth Third Bancorp (FITB), U.S. Bancorp (USB), Zions Bancorp (ZION), SunTrust Banks (STI), PNC Financial (PNC) and Regions Financial (RF).

The failed banks are victims of recession and rising loan losses. As a result of the ongoing market turmoil, these institutions experienced massive capital erosion stemming from losses arising from significant exposure to collateralized mortgage obligations (CMOs), commercial real estate loans and other commercial and industrial loans. All these factors were responsible for a drag on profitability and write-downs. According to the FDIC, U.S. banks overall lost $3.7 billion in the second quarter of 2009, compared to a profit of $7.6 billion in the prior quarter.

The current year has been difficult for consumers to pay off debt as a result of high unemployment, falling home prices and declining personal wealth.

Though current signals indicate that the economy may stabilize, we expect loan losses on commercial real estate portfolio to remain high for banks that hold large amounts of high-risk loans.
Read the full analyst report on "BBT"
Read the full analyst report on "BBV"
Read the full analyst report on "JPM"
Read the full analyst report on "STI"
Read the full analyst report on "RF"
Read the full analyst report on "FITB"
Read the full analyst report on "USB"
Read the full analyst report on "ZION"
Read the full analyst report on "PNC"
Zacks Investment Research

Colonial Officially Files – Analyst Blog

Zacks Market Commentaries — Wed, 26 Aug 2009 15:39:23 +0000

Less than two weeks after Federal Deposit Insurance Corporation (FDIC) seized Colonial BancGroup’s (CBCG) banking operations, the holding company filed for Chapter 11 bankruptcy protection yesterday. Most of Colonial’s banking assets were sold to BB&T Corp. (BBT).

The shutdown of Colonial BancGroup’s banking operations is the biggest bank failure so far this year, and the sixth-largest in U.S. history.

The estimated cost of Colonial BancGroup’s failure to the deposit insurance fund would be $2.8 billion. The FDIC and BB&T have signed an agreement to share losses on about $15 billion of Colonial BancGroup’s loans and other assets.

BB&T expects losses in the loan portfolio acquired from Colonial BancGroup’s banking operations of $5 billion will not have a negative impact on its earnings because of its loss-sharing agreement with the FDIC.

For the last several quarters the holding company posted losses as a result of its write-down of millions in residential construction and mortgage loans related to the impacted markets in Florida.

According to the filing, Colonial BancGroup had $45 million of assets and $380 million of debts as of August 14.

A planned $300 million outside investment from Taylor, Bean & Whitaker Mortgage Corp. could have supported its capital base. But Taylor itself filed for bankruptcy protection on Monday due to recent actions taken against it by the Department of Housing and Urban Development, and mortgage financiers Freddie Mac (FRE) and the Government National Mortgage Association (Ginnie Mae).

In the first half of 2009, bankruptcy protection filing increased 64% year over year to more than 30,000. Also, according to the American Bankruptcy Institute, the number of Chapter 11 business reorganizations increased 113% year over year to 7,396, and Chapter 7 business liquidations jumped 57% year over year to 20,375. Continued financial stress on both consumers and businesses due to the market turmoil was the reason for increase in bankruptcy filings this year.
Read the full analyst report on "CBCG"
Read the full analyst report on "BBT"
Read the full analyst report on "FRE"
Zacks Investment Research

Taylor Bean Files for Bankruptcy – Analyst Blog

Zacks Market Commentaries — Tue, 25 Aug 2009 17:40:00 +0000

Yesterday, Taylor, Bean & Whitaker Mortgage Corporation filed for Chapter 11 bankruptcy protection after it was forced to shutter its mortgage lending operations earlier this month.

The Ocala, Florida-based company had captured 1.7% market share nationwide by creating $17 billion of mortgage loans from January to June, 2009. On that basis, it was the 12th largest mortgage lender in the U.S.

Taylor was also one of the largest U.S. home loan providers not owned by a large bank. As a result, there was lack of significant amount of deposits that could help cushion its capital position in the troubled market environment.

The company filed for bankruptcy due to recent actions taken against it by the Department of Housing and Urban Development, and mortgage financiers Freddie Mac (FRE) and the Government National Mortgage Association (Ginnie Mae).

Further, the negative developments at Taylor were related to various investigations surrounding the failure of Colonial Bank, which was Taylor’s primary bank for years. Colonial froze about 100 Taylor Bean bank accounts earlier this month.

On Aug 14, Colonial BancGroup was seized by the Federal Deposit Insurance Corporation (FDIC). It is the biggest bank failure so far this year, and the sixth-largest in U.S. history. Colonial’s $20 billion in deposits, 346 branches and about $22 billion of assets were sold to BB&T Corporation (BBT).

According to the bankruptcy filing, Taylor has more than $1 billion of both assets and liabilities, and between 1,000 and 5,000 creditors.

In the first half of 2009, bankruptcy protection filing increased 64% year over year to more than 30,000. Also, according to the American Bankruptcy Institute, the number of Chapter 11 business reorganizations increased 113% year over year to 7,396, and Chapter 7 business liquidations jumped 57% year over year to 20,375. Continued financial stress on both consumers and businesses due to the market turmoil was the reason for increase in bankruptcy filings this year.
Read the full analyst report on "FRE"
Read the full analyst report on "BBT"
Zacks Investment Research

Zacks Bull and Bear of the Day Highlights: Transcept Pharmaceuticals, Nabors Industries, Guaranty Financial Group Inc., Banco Bilbao Vizcaya Argentaria and BB&T Corporation – Press Releases

Zacks Market Commentaries — Tue, 25 Aug 2009 13:25:31 +0000

For Immediate Release

Chicago, IL – August 25, 2009 – Zacks Equity Research highlights Transcept Pharmaceuticals (TSPT) as the Bull of the Day and Nabors Industries (NBR) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Guaranty Financial Group Inc. (GFG), Banco Bilbao Vizcaya Argentaria (BBVA) and BB&T Corporation (BBT).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676

Here is a synopsis of all five stocks:

Bull of the Day:

We recently initiated coverage of Transcept Pharmaceuticals (TSPT) with an Outperform rating and $12 price target. We think Intermezzo is a product that can fill a much needed void for insomnia patients with chronic nocturnal awakenings.

An FDA decision on the pending new drug application is expected in late October 2009. We think approval is a high likelihood event at that time.

With the commercialization partner signed and the financial position solid (estimated $95 million on hand), the stock is significantly under-valued, in our view.

Bear of the Day:

Nabors Industries (NBR) second-quarter earnings of 32 cents per share topped the Zacks Consensus Estimate of 28 cents, buoyed by stronger margins associated with new rig deployments in its international operations and solid performance from the Alaska sub-segment.

However, results were significantly below year-earlier levels, reflecting a sustained slowdown in North American activity levels. We remain concerned about the North American land drilling scene and its impact on Nabors, the largest onshore driller.

This, coupled with the company's relatively weak balance sheet in an environment of continued credit market turmoil, accounts for our Underperform recommendation.

BBV, PWRM, DrStockPick Watch List! for Monday August 24, 2009, Banco Bilbao Vizcaya Argentaria, S.A. and Power 3 Medical Products Inc, PWRM.OB

Dr. Stock Pick — Sun, 23 Aug 2009 20:35:40 +0000

BBV, Banco Bilbao Vizcaya Argentaria, S.A. PWRM, Power 3 Medical Products Inc, PWRM.OB DrStockPick Watch List! DrStockPick Watch List! for Monday August 24, 2009 My Picks for Monday August 24, 2009 are: ************************************************************** BBV, Banco Bilbao Vizcaya Argentaria, S.A. BBV is a financial services group with more than $750 billion in total assets, 48 million clients, 8,000 branches and approximately 108,000 [...]

Citigroup Faces TARP Audit – Analyst Blog

Zacks Market Commentaries — Thu, 20 Aug 2009 18:46:07 +0000

Neil Barofsky, the U.S. special inspector general for the Troubled Asset Relief Program (TARP) plans to audit a federal guarantee granted last year to protect Citigroup Inc. (C) from potentially massive losses.

The U.S. special inspector general is in charge of keeping a check on bank bailouts and will convene a team to audit the Citigroup guarantees. The appointed team will examine why the guarantees were given, how they were structured and whether the bank’s risk controls are adequate to prevent government losses.

The Federal Reserve, the Treasury and Federal Deposit Insurance Corporation (FDIC) in November 2008 guaranteed a $306 billion pool of Citigroup mortgage assets aiming at preventing the collapse of the U.S. banking system amidst a global financial crisis. Citigroup’s guarantees came on top of $45 billion of bailout funds obtained last year through TARP.

The audit is a result of the questions raised by U.S. Representative Alan Grayson about the guarantee and what it meant for taxpayers, and whether taxpayers got a fair deal. The government bailout did help calm the crisis, but it also sparked public anger over the use of taxpayer money to save rich bankers.

The audit will take several months and a deadline hasn’t been set as of yet.
Read the full analyst report on "C"
Zacks Investment Research

Colonial Will Not Hurt BB&T – Analyst Blog

Zacks Market Commentaries — Wed, 19 Aug 2009 16:45:22 +0000

Yesterday, BB&T Corp. (BBT) said expected losses in the loan portfolio acquired from Colonial BancGroup (CBCG) of $5 billion will not have a negative impact on its earnings because of its loss-sharing agreement with the Federal Deposit Insurance Corporation (FDIC).

Last Friday, BB&T took control of Colonial after it was seized by regulators. As a result, BB&T is exposed to losses connected with its purchase of Colonial assets for $21.8 billion.

The estimated cost of Colonial’s failure to the deposit insurance fund would be $2.8 billion. The FDIC and BB&T have signed an agreement to share losses on about $15 billion of Colonial's loans and other assets.

The Colonial deal is the biggest acquisition in BB&T’s history, creating the nation's eighth-largest financial holding company by deposits. BB&T is a dominant player in Southeastern U.S., where many closures have happened. Having taken over most of these failed banks, these bank failures have been beneficial for BB&T.

Unless losses exceed $5 billion, there will be no negative impact on BB&T’s earnings as FDIC is covering $14.3 billion of those assets in the loss-share agreement. The FDIC is assuming 80% of the losses between zero and $5 billion and 95% of the losses between $5 billion and $14.3 billion.

The worst-case scenario in terms of earnings for BB&T would be a pretax exposure of about $500 million if the entire portfolio of Colonial loans were to be charged off.

BB&T has already started the integration process and expects merger and integration costs to total about $245 million. It anticipates about $170 million annual pretax expense reductions.

Previously BB&T had only three branches in Alabama. As a result of the acquisition, BB&T will gain an additional 90 Colonial branches across the state. The company will also add 204 branches in Florida, where it currently has 107 offices.

We believe that a successful integration of Colonia will further strengthen BB&T’s already diversified revenue base, strong capital structure, and impressive loan and deposit growth. However, continued deterioration in the housing markets will keep the credit-related costs high throughout 2009.

Additionally, all the positives about the acquisition have already been factored into the price, leaving limited room for above-average gains. Therefore, we continue to maintain our Neutral recommendation on BB&T.
Read the full analyst report on "BBT"
Read the full analyst report on "CBCG"
Zacks Investment Research

BofA Sues Colonial – Analyst Blog

Zacks Market Commentaries — Fri, 14 Aug 2009 16:25:56 +0000

Bank of America Corp. (BAC) sued Colonial Bancgroup Inc. (CNB) to protect its claim on certain loans after the troubled company refused to return more than $1 billion it owed to Freddie Mac (FRE).

Bank of America filed the lawsuit at a federal court in Florida, asking for a temporary restraining order prohibiting Colonial from using the proceeds it received from Freddie Mac for buying mortgage and other loans owned by Ocala Funding LLC.

Bank of America was the collateral agent for the Ocala Funding loans and Colonial held them as custodian, agent and bailee. On the whole, Bank of America was a trustee to parties that provided financing for Colonial's mortgage business.

On Thursday, the court decided in favor of Bank of America and ordered Colonial to freeze $1 billion in assets.

Colonial appears to be on the threshold of collapsing as a going concern and has reportedly been subject to criminal investigation for alleged accounting irregularities. The lawsuit is an additional concern for Colonial as it will face further financial trouble.

According to the Colonial management, the company will not be able to file its second-quarter financial report as alleged accounting irregularities now being investigated. The company has informed the Securities and Exchange Commission to this effect.

The Alabama State Banking Board is expected to ask Colonial for permission to allow the Federal Deposit Insurance Corporation (FDIC) to take it over. If the bank fails, the FDIC would find a new owner for it as quickly as possible. If Colonial collapses, it would be the largest bank failure this year. Its potential buyers include BB&T Corp. (BBT) and SunTrust Banks Inc. (STI).

Read the full analyst report on "BAC"
Read the full analyst report on "CNB"
Read the full analyst report on "FRE"
Read the full analyst report on "BBT"
Read the full analyst report on "STI"
Zacks Investment Research

DrStockPick.com Stock Report! 8/13/09, HALL, PAET, IKNX, PKY, RODM, NOC

Dr. Stock Pick — Thu, 13 Aug 2009 18:09:16 +0000

DrStockPick.com Stock Report! Thursday August 13, 2009 ************************************************************** Hallmark Financial Services, Inc. (Nasdaq:HALL) (”Hallmark”) today reported second quarter 2009 net earnings of $4.3 million compared to $7.4 million reported for second quarter 2008. Year to date, Hallmark reported net earnings of $11.1 million, compared to $14.7 million for the same period the prior [...]

Zacks Analyst Blog Highlights: JPMorgan Chase, Wells Fargo & Company, Zions Bancorp, BB&T Corp. and Fifth Third Bancorp – Press Releases

Zacks Market Commentaries — Tue, 11 Aug 2009 13:10:14 +0000

For Immediate Release

Chicago, IL – August 11, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: JPMorgan Chase (JPM), Wells Fargo & Company (WFC), Zions Bancorp (ZION), BB&T Corp. (BBT) and Fifth Third Bancorp (FITB).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Monday’s Analyst Blog:

Bank Shutdowns Continue

In the first quarter of 2009, the number of banks on the Federal Deposit Insurance Corporation’s (FDIC) list of problem institutions jumped to 305. This is the maximum number since the savings and loan crisis in 1994.

Out of the 3 banks, 2 were Florida based and the other one was Oregon based. The FDIC has appointed receivers of the banks. According to the FDIC, the cost to the deposit insurance fund from the failure of the three banks will be around $185 million.

The First State Bank, of Sarasota, Fla. and the Community National Bank of Sarasota County of Venice, Fla. were sold to Stearns Bank of St. Cloud, Minnesota. The Community First Bank of Prineville, Oregon was sold to Home Federal Bancorp of Nampa, Idaho.

Total assets and deposits of First State Bank, Community National Bank and Community First Bank were $463 million and $387 million, $97 million and $93 million, and $209 million and $182 million, respectively.

The largest acquirers of failed U.S. banks during 2008 and 2009 include JPMorgan Chase (JPM), Wells Fargo & Company (WFC), Zions Bancorp (ZION), BB&T Corp. (BBT) and Fifth Third Bancorp (FITB).

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com

Zacks Investment Research

Bank Shutdowns Continue – Analyst Blog

Zacks Market Commentaries — Mon, 10 Aug 2009 15:44:02 +0000

Three more banks were shuttered by U.S. regulators on Friday. This brings the total number of failed federally insured banks during this year to 72, compared to 25 in 2008 and 3 in 2007.

In the first quarter of 2009, the number of banks on the Federal Deposit Insurance Corporation’s (FDIC) list of problem institutions jumped to 305. This is the maximum number since the savings and loan crisis in 1994.

Out of the 3 banks, 2 were Florida based and the other one was Oregon based. The FDIC has appointed receivers of the banks. According to the FDIC, the cost to the deposit insurance fund from the failure of the three banks will be around $185 million.

The First State Bank, of Sarasota, Fla. and the Community National Bank of Sarasota County of Venice, Fla. were sold to Stearns Bank of St. Cloud, Minnesota. The Community First Bank of Prineville, Oregon was sold to Home Federal Bancorp of Nampa, Idaho.

Total assets and deposits of First State Bank, Community National Bank and Community First Bank were $463 million and $387 million, $97 million and $93 million, and $209 million and $182 million, respectively.

The largest acquirers of failed U.S. banks during 2008 and 2009 include JPMorgan Chase (JPM), Wells Fargo & Company (WFC), Zions Bancorp (ZION), BB&T Corp. (BBT) and Fifth Third Bancorp (FITB).

The failed banks are victims of recession and rising loan losses. As a result of the ongoing market turmoil, these institutions experienced massive capital erosion stemming from losses due to significant exposure in collateralized mortgage obligations (CMOs), commercial real estate loans and other commercial and industrial loans.

The current year has been difficult for consumers to pay off debt as a result of high unemployment rate, falling home prices and declining personal wealth.

Though current signals indicate that the economy may stabilize losses on home mortgages in the near-term, we expect loan losses on commercial real estate portfolio to remain high for banks that hold large amounts of high-risk loans.
Read the full analyst report on "JPM"
Read the full analyst report on "WFC"
Read the full analyst report on "ZION"
Read the full analyst report on "BBT"
Read the full analyst report on "FITB"
Zacks Investment Research

The FDIC is in Trouble

Contrarian Profits — Wed, 05 Aug 2009 23:36:21 +0000

pAs we all know, the Federal Deposit Insurance Corporation (FDIC) guarantees depositors that they’ll get their money back if a bank fails, at least up to a certain amount. To fund its operations, the FDIC collects small fees from the banks that are held in reserve for the purpose of taking over troubled banks and paying off depositors./p pSince the Great Depression, a period marked by widespread runs on banks, the FDIC has done a good job of fulfilling its mandate. So how are they doing in this crisis?/p pstrongIn a nutshell, they are in trouble./strong/p pThe FDIC insures 8,246 institutions, with $13.5 trillion in assets. Not all of them are going bankrupt, of course. Yet as of late July, a disturbing 64#8230;/p

NewAlliance Beats Again – Analyst Blog

Zacks Market Commentaries — Wed, 29 Jul 2009 17:10:21 +0000

NewAlliance Bancshares Inc.’s (NAL) second quarter adjusted operating earnings (excluding one-time items) came in at 13 cents per share, compared to 12 cents in the prior quarter and the year-ago period. Results were 5 cents ahead of our estimates.

The upside was primarily due to strong growth in core deposits, organic loan originations and stable net interest margin. Credit quality, though still quite solid, weakened further during the quarter with higher levels of provisions, net charge-offs and non-performing assets.

Net income for the quarter was $10.1 million or $0.10 per share, compared to $11.8 million or $0.12 per share in the prior-year quarter. Results were 2 cents ahead of our estimates and a penny ahead of market expectations.

The results were impacted by an after-tax charge of $2.6 million related to a special assessment by the Federal Deposit Insurance Corporation (FDIC). Excluding this one-time item, operating earnings were $12.7 million or $0.13 per share compared to $11.6 million or $0.12 per share in the prior quarter and $11.8 million or $0.12 per share in the prior-year quarter.

Net interest income increased 4.0% sequentially and 3.5% year over year to $49.9 million. NIM for the quarter improved 5 bps sequentially but declined 4 bps year over year to 2.63% due to the exclusion of dividends from the Federal Home Loan Bank of Boston (FHLB). Non-interest income increased 6.9% sequentially and 5.3% year over year to $15.3 million. Non-interest expenses for the reported quarter increased 9.9% sequentially and 7.5% year over year to $44.4 million.

At June 30, 2009, the company remained well capitalized with Tier 1 leverage ratio of 10.88% compared to 11.02% at March 31, 2009 and 11.16% at June 30, 2008.

Overall credit quality deteriorated further during the quarter. Net charge-offs were up 6 bps sequentially and 22 bps year over year to 0.33% of average loans. Non-performing assets also deteriorated 4 bps sequentially and 32 bps year over year to 0.65% of total assets. The allowance for loan losses increased 3 bps sequentially and 9 bps year over year to 1.06% of total loans. The provision for loan losses increased 22.0% sequentially and 35.1% year over year to $5.0 million.

Return on equity (ROE) declined 46 bps sequentially and 44 bps year over year to 2.89%. Return on assets (ROA) also declined 8 bps sequentially and 11 bps year over year to 0.47%.

Book value came in at $13.18 per share at June 30, 2009, compared to $13.06 per share at March 31, 2009 and $13.03 per share at June 30, 2008. Tangible book value came in at $7.87 per share at June 30, 2009, compared to $7.73 per share at March 31, 2009 and $7.70 per share at June 30, 2008.

Strong capital position remains a key positive attribute for NewAlliance Bancshares as it has not participated in TARP, in view of its comfortable capital and liquidity position. While the company is expected to benefit from its strong capital position and credit quality relative to its peers, we believe increasing credit costs will keep the earnings under pressure.

Based on second quarter results, we are maintaining our Hold recommendation on the shares.

Read the full analyst report on "NAL"
Zacks Investment Research

Wilmington Does Not Fall Short – Analyst Blog

Zacks Market Commentaries — Fri, 24 Jul 2009 16:00:00 +0000

Wilmington Trust Corp.’s (WL) second quarter operating earnings of $0.06 per diluted share were four pennies ahead of our estimate and much ahead of consensus. However, as expected by the company a few days ago, the results suffered an 83.1% increase in provision and a special consideration of Federal Deposit Insurance Corporation (FDIC) of approximately $5 million.

Excluding preferred dividends, net loss available to common shareholders came in at $13.6 million or $0.20 per diluted share, compared to a net loss of $19.5 million or $0.29 per diluted share in the prior-year quarter. The results for the reported quarter included securities losses of $23.4 million on trust-preferred investment securities, which reduced earnings by approximately $0.26 per diluted share. The operating earnings exclude this after-tax securities impairment.

Credit metrics worsened during the quarter, with period-end non-performing assets increasing to 3.59% of loans (up 93 bps sequentially) and quarterly net charge-offs at 0.39% of average loans (up 17 bps sequentially). During the reported quarter, WL increased provision for loan losses to $54.0 million from $29.5 million in the prior quarter. The loan-loss-reserve ratio increased to 2.02% from 1.77% in the prior quarter.

Tax-equivalent net interest income increased 3.9% sequentially but decreased 4.5% year-over-year to $82.1 million, as Net Interest Margin (NIM) increased 25 bps sequentially but decreased 1 bp year-over-year to 3.16% at the end of second quarter 2009. Average loans decreased 1.3% sequentially but increased 3.4% year-over-year to $9.4 billion. Average deposits decreased 2.2% sequentially and 3.4% year-over-year to $7.6 billion.

Total non-interest income decreased 26.3% sequentially and 12.4% year-over-year to $81.6 million. Non-interest expenses increased 1.4% sequentially but decreased 31.9% year-over-year to $128.4 million.

The non-interest expense for the quarter included the special FDIC insurance assessment of $5.3 million. The year-over-year increase in non-interest expenses resulted primarily from the two CCS retirement services acquisitions completed in 2008.

Return on Equity (ROE) for the quarter came in at negative 3.58%, an improvement from negative 7.01% in the prior-year quarter and Return on average Assets (ROA) was negative 0.32%, an improvement from negative 0.66% in the prior-year quarter.

Book value at June 30, 2009 was $14.26 per share, compared to $14.64 at March 31, 2009 and $15.85 at June 30, 2008.

Though loan growth has been impressive relative to many of its peers -- Webster Financial (WBS), Valley National (VLY) and Fulton Financial (FULT) -- so far, mainly due to strong economic growth in the Delaware region, the pace of growth has started to moderate in the last few quarters.

We expect the pace to slow down further in the near to medium-term, based on the ongoing weakness in the economy. Thus, we are maintaining our Sell recommendation on the shares of WL.
Read the full analyst report on "WL"
Read the full analyst report on "WBS"
Read the full analyst report on "VLY"
Read the full analyst report on "FULT"
Zacks Investment Research

First Capital Bancorp, Inc. (FCVA) Sees Problem Loans Decrease in Most Recent Quarter

QualityStocks — Tue, 21 Jul 2009 19:48:00 +0000

First Capital Bancorp, Inc. reported its second quarter earnings for the period ending June 30, 2009. The bank reported a net loss of $731,000, or $0.29 per diluted share, compared to net income of $0.13 per share in the same quarter in 2008. John Presley, the CEO of First Capital Bancorp, Inc. said, “While [...]

Wilmington Trust to Fall Short – Analyst Blog

Zacks Market Commentaries — Mon, 20 Jul 2009 21:20:01 +0000

On July 17, 2009, Wilmington Trust Corp. (WL), a mid-cap financial services holding company, cautioned that its second-quarter earnings may fall short of market expectations, primarily driven by increased provision, other-than-temporary impairments, and a special consideration of Federal Deposit Insurance Corporation (FDIC).

Ahead of second quarter results, the consensus estimate was $0.09 per diluted share and we had estimated the earnings to be $0.02 per diluted share. However, given the company’s anticipated provision for loan losses of $54 million for the second quarter, which is higher than our estimate, we expect the earnings to slightly miss. But it is expected to fall far short of consensus.

The company expects nonperforming loans to increase 32.2% sequentially to approximately $332 million, net charge-offs to increase 69.8% sequentially to approximately $36 million. All these as well as downgrades in internal credit risk ratings are the reasons for anticipating an 83.1% higher provision for loan losses compared to the first quarter of 2009.

The other reasons for the expected decline in the bottom-line are an expected pre-tax charge of approximately $23 million for other-than-temporary impairments on pooled trust-preferred investment securities and a special assessment by the FDIC of approximately $5 million.

Credit quality remained mixed during the last quarter, with non-performing assets increasing to 2.67% of related assets (up 48 bps sequentially) and year-to-date net charge-offs at 0.22% of average loans (down 35 bps sequentially). However, management is confident of reporting a sound position during second quarter earnings release. The company has received $330 million in Capital Purchase Program funds in exchange for Wilmington Trust Series A preferred stock issued to the U.S. Department of the Treasury.

Though loan growth has been impressive relative to many of its peers -- Webster Financial (WBS), Valley National (VLY) and Fulton Financial (FULT) -- so far, mainly due to strong economic growth in the Delaware region, the pace of growth has started to moderate in the last few quarters.

We expect the pace to slow down further in the near- to medium-term, based on the ongoing weakness in economy. Thus, we are maintaining our Sell recommendation on the shares of WL.
Read the full analyst report on "WL"
Read the full analyst report on "WBS"
Read the full analyst report on "VLY"
Read the full analyst report on "FULT"
Zacks Investment Research

PennyOmega.com Stock Report! 7/17/09, CVA, BEAC, TSRA, SHIP, LF, BOMK

PennyOmega.com — Fri, 17 Jul 2009 21:09:14 +0000

<<<<<<<<<<<<<<<<<<<<

Chas. Schwab Q2 a Mixed Bag – Analyst Blog

Zacks Market Commentaries — Fri, 17 Jul 2009 20:29:45 +0000

On July 16, 2009, Charles Schwab Corp. (SCHW) reported financial results for the second quarter. GAAP net income for the quarter decreased 5.96% sequentially and 30.5% year-over-year to $205 million or $0.18 per share. Results were primarily affected by a 17.1% decline in net revenue as a result of lower net interest revenue (down 29.2%) and asset management & administration fees (down 21.4%), partly offset by higher trading revenue (up 18.3%).

The quarter’s results included pre-tax charges relating to expense reduction measures of $40 million and $16 million of Federal Deposit Insurance Corporation (FDIC) special industry assessment charges. Excluding these non-recurring items, adjusted net income for the quarter came in at $0.21 per diluted share, three pennies ahead of our estimates as well as consensus.

Total non-interest expense decreased 0.8% sequentially and 5.5% year-over-year to $750 million as a result of expense reduction initiatives. Schwab indicated that it is on-track to achieve its target expense reduction of 7%-8% year-over-year in the fiscal year 2009.

As of June 30, 2009, Schwab had total client assets of $1.2 trillion (down approximately 12.4% year-over-year). New client assets decreased 33.5% to $17.3 billion compared to the prior-year period.

Return on equity for the quarter came in at 18%, down from 21% in the prior quarter and 32% in the prior-year quarter.

We suspect that the results will be impacted by the challenging market conditions and lower interest rates, while the stronger client activity resulting from increased market volatility will provide some support during the coming quarters.

After second quarter results, we are maintaining our Hold recommendation on the shares.
Read the full analyst report on "SCHW"
Zacks Investment Research

BB&T Reports Strong Q2 Results – Analyst Blog

Zacks Market Commentaries — Fri, 17 Jul 2009 19:04:17 +0000

On July 17, 2009, BB&T Corporation (BBT) reported its second quarter 2009 financial results. Operating earnings for the quarter (excluding $0.07 per diluted share of special assessment from the Federal Deposit Insurance Corporation or FDIC, $0.08 per diluted share accelerated amortization on the preferred stock repaid to the Treasury in connection with the TARP and $0.06 per diluted share gains on sales of securities and extinguishment of debt) came in at $0.29 per diluted share, five pennies ahead of our estimate and eight pennies ahead of consensus.

Though the quarter experienced higher loan losses and additional loan loss reserves, strong capital levels, increased production in mortgage banking operations, and strong growth in commercial loans as well as low-cost client deposits were impressive during the quarter.

GAAP net income in the quarter was $121 million or $0.20 per diluted share, compared to $428 million or $0.78 per diluted share in the prior-year quarter.

Tax-equivalent net interest income for the quarter was $1.2 billion, flat sequentially and up 7.1% year-over-year. Operating net interest margin was 3.56% for the current quarter, flat sequentially and down 9 basis points from the prior-year quarter. Core non-interest income (which excludes securities gains and losses) for the quarter increased 20.1% year-over-year to $993 million, mainly due to a 222.8% increase in mortgage-related revenues and 18.6% increase in insurance income.

Non-interest expense for the quarter increased 23.1% year-over-year to $222.0 million and included $103 million of additional FDIC insurance expense, foreclosed property-related expenses, legal fees and settlements totaling $56 million associated with the current credit environment. Excluding these items, non-interest expenses was essentially flat year over year.

Credit metrics deteriorated further during the quarter, with non-performing assets rising 57 bps sequentially to 3.29% of average loans and leases plus foreclosed property. Net charge-offs increased 23 bps sequentially to 1.58% of average loans and leases.

Profitability metrics also suffered during the quarter, with return-on-average assets and return-on-average equity down to 0.56% and 3.43% as compared to 0.86% and 8.29%, respectively, at the end of the prior quarter and 1.28% and 13.27%, respectively, at the end of the prior-year quarter.

Tier-1 leverage ratio was 8.5% at June 30, 2009, down from 9.4% during the prior quarter but up from 7.2% at June 30, 2008. In addition, BBT’s Tier-1 risk-based capital and total risk-based capital ratios were 10.6% and 15.2%, respectively, down from 12.1% and 17.1%, respectively, at March 31, 2009. However, BBT’s risk-based capital ratios are significantly higher than its peer average and remain well above regulatory standards for well-capitalized banks.

Stress tests results showed that BBT did not need any additional capital, and the company repaid TARP funds after a common stock offering and 68% reduction in dividend. Therefore, based on 2Q09 results, we are maintaining our Hold recommendation.
Read the full analyst report on "BBT"
Zacks Investment Research

An Economy on Life Support

Bill Bonner — Wed, 15 Jul 2009 20:20:16 +0000

h1 class="entry-title"Waterford, Ireland /h1 pOur faith is weakening. That is, our faith that the government will be able to cause inflation, sooner or later. Let’s review our own narrative: strongdeflation now, inflation later./strong/p div class="entry-content" pstrongbr / /strong/p pIt’s very simple. Maybe too simple. After a half a century of credit expansion, we now have a credit contraction. In this sense, everything is happening as it should./p pThere was a crash and credit crunch at the end of last year. Then, the feds panicked. They fought back with monetary and fiscal stimulus. Rates were cut to nearly zero. The Fed flooded the system with cash and easy credit – buying up Wall Street’s bad investments…propping up bad banks…and guaranteeing trillions worth of bad debt. And the federal government passed a stimulus#8230;/p/div

Off-balance-sheet federal liabilities

James Hamilton — Sun, 05 Jul 2009 22:14:45 +0000

Just how much has the U.S. government promised to pay?

Total public debt outstanding of the U.S. Federal Government is currently $11,490 billion, or $124,000 per taxpayer. But a fair chunk of that total public debt-- $4,350 B to be exact-- is money that the government owes to itself, about half to the Social Security Trust Fund, and the remainder to other government accounts such as Civil Service Retirement and Disability, Military Retirement, Medicare, and Unemployment Insurance Trust Funds. The debt actually held by the public is "only" $7,140 billion, which amounts to half of last year's GDP. The Congressional Budget Office estimates that debt held by the public will rise to 56.6% of GDP by the end of this year. That will put the number well above the peaks reached in the Revolutionary War, Civil War, World War I, or the Reagan years, though still significantly below the debt run up from World War II.

Figure 1. Federal debt held by the public as a percent of GDP, 1790-2008, and projected for 2009. Data source: Congressional Budget Office.

But is it correct to subtract off the $4.3 trillion that the government owes "to itself"? These intragovernmental accounting entries represent an intention of the government to deliver real resources to certain parties, such as retirees, at a future date, so perhaps we should include them in a reckoning of all that the government has promised to pay. On the other hand, given what is currently promised, and given trends in the aging population and rising medical costs, if benefit formulas continue as present, the amount that the government would be obligated to deliver far exceeds the sums acknowledged in the intragovernmental debt accounts or what could be covered with future tax revenues.

One calculation that the CBO has performed is what they call an "alternative fiscal scenario" representing

one interpretation of what it would mean to continue today's underlying fiscal policy. This scenario deviates from CBO's baseline even during the next 10 years because it incorporates some policy changes that are widely expected to occur and that policymakers have regularly made in the past.

According to the CBO, in the absence of a significant increase in taxes above historical rates or change in benefit policies, growth in Medicare, Social Security, and Medicaid would quickly produce an explosion of federal debt.

Figure 2. Debt held by the public as a percent of GDP, 1790-2008, and projected for 2009-2083 under the "alternative fiscal scenario". Data source: Congressional Budget Office.

Of course such a path is completely infeasible and unsustainable. Then what exactly is the government promising to provide in the way of retirement medical care and income for those currently working, and what will the government actually deliver? The answer to both questions is unclear to me, though I have no doubt that this category of off-balance-sheet liability represents a potentially staggering sum.

But whatever you think future spending on Medicare will be, consider some of the other off-balance sheet federal promises. At the end of 2008, the Federal Deposit Insurance Corporation had insured $4.8 trillion in deposits. Fannie and Freddie, which are now effectively nationalized, bring perhaps another $4.9 trillion in notional liabilities to the table. Those two alone sum to an amount well in excess of the current federal debt owed to the public.

Ah, but the federal government wouldn't actually be asked to honor more than a small fraction of those guarantees, would it? Only a few banks will fail, and the prime loans insured by Fannie and Freddie are safe, right? Right?

Still, even a modest fraction of $10 trillion sounds like a lot of money to me.

Then there's the loose change, such as the $1.1 trillion in obligations of the Federal Home Loan Banks. The federal government does not officially acknowledge responsibility for the liabilities of these government-sponsored enterprises, though that of course is what it had also claimed about Fannie and Freddie. Government-owned Ginnie Mae has issued guarantees on another $577 billion in mortgage-backed securities, while the Federal Housing Administration has insured $532 billion in mortgages. The U.S. Federal Reserve has added $1.1 trillion to its liabilities since September. And now loan guarantees appear to be the instrument of choice for U.S. energy policy ([1], [2]).

Of course there's a simple reason why all this happens. There is tremendous pressure for politicians to deliver in the form of off-balance-sheet commitments. Voters credit them for giving us what we want now, and blame somebody else when the time comes to pay for it. I'm amazed that no one is being held accountable for the fiasco of Fannie and Freddie, and indeed leading elected officials continue to advocate more of the same policies that created the original problem.

Some might look at Figure 1 and conclude that the U.S. could issue much more debt and still find ready buyers. But I worry that Figure 1 is only the tip of a very big iceberg.

Trusting Banks as Far as You Can Throw Them

Mogambo Guru — Thu, 18 Jun 2009 15:00:18 +0000

pI was kind of dozing, idly dreaming of playing golf, where if I wasn’t putting the ball right into the cup from 25 feet away, then I was chipping it in from 25 yards out, wowing the crowd with deft wedge action, whereupon my caddy, a beautiful girl in a bikini and stiletto heels, would say, “Oooh! Nice one! You are so good that it gets me hot! I am panting for you, my Hot Mogambo Golfing Stud (HMGS)!”/p pSuddenly, I was jolted rudely awake by alarms ringing in the Mogambo Bunker Of Paranoid Delusions (MBOPD) at the news of a drop of $40 billion of Total Fed Credit last week. Wow! This is the “money” that magically appears, literally “out#8230;/p

Wall Street vs. Main Street: The Regulatory Battle Begins Tomorrow

Jim Musselwhite — Tue, 16 Jun 2009 17:24:53 +0000

By Shah Gilani Contributing Editor Money Morning [Editor's Note: Is it a new bull market, or just a bear-market rally that's going to separate investors from the last of their cash? For the shrewdest investors, it may not matter. A new offer from Money Morning is a two-way win for investors: Noted commentator Peter D. Schiff's new [...]

Prieur’s readings

Prieur du Plessis — Sat, 13 Jun 2009 05:39:38 +0000

This post provides links to some interesting articles I have read over the past few days that you may also enjoy.

The Almighty Dollar

Contrarian Profits — Thu, 28 May 2009 20:17:40 +0000

pAfter last week’s thumping at the hand of all its major counterparts, the dollar is looking to me like Charles Atlas’ 98-pound weakling from the old comic book ads. Sand is getting kicked in its face from every bully on the beach. Even the lowly yen, with its pacesetting negative GDP (a negative 250% of the United States), is kicking the dollar’s bootie./p pWhen this rot began to be exposed, I often reported that things had been turned on their head in the currency world. strongBad news for the U.S. economy became good news for the currency. Why?/strong/p pBasically, risk aversion settled over the market. People and governments were fearful. And since currencies tend to be considered risky investments, investors avoided them.#8230;/p

What You Need To Know About FDIC Insurance

Investment Education Staff — Fri, 22 May 2009 10:58:20 +0000

What's the FDIC?

Another Bank Failure Makes 33 So Far This Year

Daniel Shepard — Sat, 09 May 2009 10:41:12 +0000

Saturday May 9, 2009 Navivest The Federal Deposit Insurance Corporation or FDIC, which insures the deposits in federally regulated banks and thrifts, today announced that Westsound Bank of Bremerton,... [[ This is a content summary only. Visit my webs...

America’s Financial Oligarchy Is Still in Control

Lorimer Wilson — Mon, 06 Apr 2009 11:46:56 +0000

“The crash has laid bare many unpleasant truths about the United States. One of the most alarming is that the finance industry has effectively captured our government”, says Simon Johnson, a chief economist with the International Monetary Fund in 2007 and 2008. In an article entitled “The Quiet Coup” in the May, 2009 issue of [...]

Geithner Seeks Regulatory Powers – Analyst Blog

Zacks Market Commentaries — Tue, 24 Mar 2009 17:27:00 +0000

Highlights include American International Group, Inc. (AIG), Citigroup Inc. (C) and Bank of America Corp. (BAC).

Geithner Seeks More Powers Over Major Financial Institutions

Treasury Secretary Timothy Geithner today called on Congress to grant him new powers to regulate major financial institutions like AIG (AIG), whose failure could pose huge risks to the U.S. financial system and the broader economy.

Geithner in particular requested for powers similar to those of the Federal Deposit Insurance Corporation (FDIC), which has authority to seize control of banks, take over their bad assets and sell them.

The powers being sought by the Treasury Secretary would allow setting up a conservatorship or receivership for a failing financial company. The government would have the power to take control of the firm and sell or transfer parts of it, in order to reduce its risk to the financial system.

Geithner also said the government would have the power to "renegotiate or repudiate" a company's contracts, including those with its employees. This comes in wake of outrage over the AIG bonus payments, which were stated to be mandated by contracts agreed to before the government bailout of the company.

It was argued that if such powers were in place last year, the government could have used them to better handle AIG and Bear Stearns, which were bailed out by the government, and Lehman Brothers, which was not rescued and was forced into bankruptcy.

Government bailouts of AIG, Citigroup (C), Bank of America (BAC) and others involving billions of dollars have brought into focus the need to better handle the "too big to fail" financial companies.

Federal Reserve Chairman Ben Bernanke also emphasized the "urgent need for new resolution procedures for systemically important nonbank financial firms." Earlier, while reacting to the AIG's bonuses, President Obama had talked about developing tools to "prevent ourselves from getting in a situation where an AIG can threaten the entire financial system." Zacks Investment Research

Government Reiterates Continued Support For Banks

Daniel Shepard — Mon, 23 Feb 2009 16:38:59 +0000

Monday February 23, 2009 Navivest Through a joint statement issued by the U.S. Department of the Treasury, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Reserve Board, the government today pledged its commitment to stand behind the country’s banks and ensure that they have [...]

The Obama Stimulus: Truth and Consequences

Martin D. Weiss, Ph.D. — Mon, 16 Feb 2009 13:48:38 +0000

Never before have I learned so much so quickly from my readers as I have now — all just by reading the thousands of comments you have posted on my blog in the past week! One of your key questions: Will the new ...

Four More Banks Shut Down On Friday 02/13/09

Daniel Shepard — Sat, 14 Feb 2009 13:31:50 +0000

Saturday February 14, 2009 Navivest Four more banks fell victim to the deteriorating economy and were closed by financial regulators in their respective states on Friday. The banks, Pinnacle Bank, Beaverton, OR, Corn Belt Bank and Trust Company Pittsfield, IL, Riverside Bank of the Gulf Coast, Cape Coral, FL, Sherman County Bank, Loup City, NE were all relative [...]

Gold and the Fear Trade

Money and Markets — Thu, 12 Feb 2009 03:22:45 +0000

I would like to state for the record that what's happening to the U.S. economy is freaking me out. And I think that if you're not scared, you're not paying attention. That said, there are positive steps you can take to protect ...

Concerning a “Bad Bank” Scenario – Analyst Blog

Zacks Market Commentaries — Wed, 28 Jan 2009 11:12:48 +0000

The following blog post concerns Citigroup (C), Bank of America (BAC), Wells Fargo (WFC), US Bancorp (USB) and Regions (RF).

The rumor du jour is that President Obama may be close to a plan to resolve some of the overhang that has caused the credit crunch/crisis in our financial system. It appears the president may be close to announcing a "Bad Bank" plan, which would in all likelihood be managed by the Federal Deposit Insurance Corporation (FDIC). This is somewhat reminiscent of the Resolution Trust.

The premise of the potential plan is not wholly dissimilar to what we proposed back before the election. We would agree that a government-owned "bad bank" could help to some degree, though it is not the entire answer and would not spur financial institutions to lend. Our concern is that a full government-owned "bad bank" just would eliminate just the current non-performing loans on many of the banks balance by throwing $1.0 trillion in government aid at the current problems without addressing the trillions of dollars in Alt-A and Option ARM loans coming due in the next several years.

This type of plan does not push any of the responsibility back on to the financial institutions, nor the borrowers. We are also concerned that this plan would not result in propping up the housing market sufficiently. In the recent existing home sales data, while home sales were up, the price of homes was down -- nearly 50% of the sales was attributed to "distressed homes" or foreclosures. Moreover, while the number of months on the market was down to nearly 9 months, it remained approximately 100% higher than the 4-5 month norm.

With home prices down double-digit rates currently, this trend should not be expected to end anytime soon. What will support housing prices if foreclosure rate continue to remain at current levels (and mostly likely will continue to expand)? Clearly foreclosure valuations continue to moderate, as we saw in today's Chicago Tribune, a $1.0 million 6-bedroom mansion purchased in 2005 was just priced at under $350,000 (65% loss in value) and prices in the Loop (downtown) have declined 33% year-over-year.

Nothing has been proposed by the financial institutions or the government to keep loans current or keep people in their homes. The $1.0 trillion would only put a band-aid on the problem. With a cleaned-up balance sheet, the financial institutions would have less incentive to lend as they waited for the next round of Alt-A and Option ARM foreclosures that they refuse to realistically price and await another government bailout, mostly likely $2-3 trillion (conservatively).

In a recent blog, we suggested that $700 billion in government aid could benefit about $3.0 trillion in mortgages for reasonably qualified borrowers, say those with a 650 FICO score or better to start. For a financial institution to get 20-25% of the original loan value to be refinanced, they would write-down 20-25% of the original loan and refinance 80-75% of the original loan to the original borrower. This would be a huge benefit for many financial institutions to include but not limited to Citigroup (C), Bank of America (BAC), Wells Fargo (WFC), US Bancorp (USB) and Regions (RF).

For example, a $300,000 home with a $300,000 mortgage -- the bank would write-down $60,000 of the loan to be refinanced, the borrower would now only be responsible for $240,000 30-year, fixed rate mortgages (current rate about 5.0%) and the financial institution would then apply for $60,000 in government aid. For a home with negative equity, the same would apply. The bank would not have any deterioration in its capital levels nor experience a rise in its non-performing assets; as the loan has not gone into the foreclosure process, the homeowner can stay in the home.

Since few homes have gone into foreclosure and sold for pennies on the dollar, home inventories decline to normalized levels and home prices firm at the very least. This would be a win-win for all concerned parties. Under the plan we propose, this solves a significant portion of the problem, but more importantly, the government could actually experience a 4-5x level of the funds it has allocated to the resolution of this problem.

Read the full analyst report on C

Read the full analyst report on BAC

Read the full analyst report on WFC

Read the full analyst report on USB

Read the full analyst report on RF

"C" Free Stock Analysis: Buy? Sell? Hold?
"BAC" Free Stock Analysis: Buy? Sell? Hold?
"EFC" Free Stock Analysis: Buy? Sell? Hold?
"RF" Free Stock Analysis: Buy? Sell? Hold?
"USB" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Bank Of America Getting $20 Billion From Government

Daniel Shepard — Fri, 16 Jan 2009 09:26:25 +0000

Friday January 16, 2009 Navivest The U.S. Treasury announced very early this morning, that it “entered into an agreement today with Bank of America (BAC), to provide a package of guarantees, liquidity access and capital as part of its commitment to support financial market stability.” Under terms of the agreement, the government through the Treasury and the Federal [...]

FDIC Finds Buyer For IndyMac

Daniel Shepard — Mon, 05 Jan 2009 20:26:15 +0000

Monday January 5, 2009 Navivest The Federal Deposit Insurance Corporation (FDIC) has announced that it has signed a letter of intent to sell failed mortgage lender IndyMac, which was the seventh largest savings and loan and the second largest independent mortgage lender in the country when it failed and was seized by the FDIC on July 11, [...]

Two More Banks Fail

Daniel Shepard — Sat, 13 Dec 2008 04:07:42 +0000

Friday December 12, 2008 Navivest With the closure of two more banks by banking regulators Friday evening, the number of banks that have failed so far this year in the U.S., now totals 25. While that does not sound like a lot especially considering that there are over 8,500 fedrally insured banks and thrifts operating in the U.S., [...]

Guns, Safes and Treasuries: America’s Top Sellers

Alex Stanczyk — Mon, 08 Dec 2008 19:40:41 +0000

Guns, Safes and Treasuries: America’s Top Sellers Robert Morley, Columnist From theTrumpet.com December 2, 2008 Making money today is a lot tougher, but economic crisis breeds opportunities. The next big sellout items: bunkers, mattresses and Bibles. I shouldn’t have been so shocked. Considering the economy, and the state of the banking sector, I probably should have expected it, but it [...]

U.S. Government Invest $20 Billion In Citigroup

Daniel Shepard — Mon, 24 Nov 2008 13:34:40 +0000

Monday November 24, 2008 Navivest Citigroup (C) which seen its shares decimated along with just about every other stock, saw an acceleration of the decline in its shares last week, as Wall Street turned its negative focus on the company. The shares traded as high as $10.11 exactly a week ago, but by Friday, they were down to [...]

FDIC Plan Could Prevent 1.5 Million Foreclosures

QualityStocks — Fri, 14 Nov 2008 22:13:24 +0000

The Federal Deposit Insurance Corporation on Friday proposed the use of $24 billion in government funding in an effort to save up to 1.5 million American homeowners from foreclosure. Providing resistance to the idea that the money might come from the recently passed $700 billion rescue bill, the Treasury Department holds firm to the notion [...]

FDIC-Backed Banks Can Fail

Jim Musselwhite — Thu, 13 Nov 2008 03:40:47 +0000

With big bank bailouts dominating the news, there’s no better time to get the truth about bank safety. This informative article has been excerpted from Bob Prechter’s New York Times bestseller Conquer the Crash. Unlike recent news articles that are responding to the banking crisis, it was published in 2002 before anyone [...]

U.S Records 17th Bank Failure In 2008

Daniel Shepard — Sat, 01 Nov 2008 14:24:37 +0000

Saturday November 1, 2008 Navivest Freedom Bank, which is based in Bradenton, Florida, was shut down yesterday, by the Commissioner of the Florida Office of Financial Regulation. The Federal Deposit Insurance Corporation (FDIC) was named receiver. The FDIC has entered into a purchase and assumption agreement with Fifth Third Bank of Grand Rapids, Michigan and Fifth Third [...]

FDIC to Increase Cost of Deposit Insurance

QualityStocks — Tue, 07 Oct 2008 19:35:41 +0000

On Tuesday, the Federal Deposit Insurance Corporation proposed an increase in insurance fees that would double the current rate charged to a financial institution for accepting deposits. Oher changes that will affect fees imposed upon institutions of higher risk are scheduled for April. FDIC Chairwoman Sheila Bair asserts the industry’s need for the current action. [...]

3 Questions The Government Doesn’t Want You To Ask About the Financial Crisis

Jim Musselwhite — Sat, 04 Oct 2008 01:35:28 +0000

(And 3 Shocking Answers!) Bob Prechter, President of Elliott Wave International (EWI), is no stranger to challenging the status quo. His New York [...]

Washington Mutual Goes Under

Daniel Shepard — Fri, 26 Sep 2008 06:29:37 +0000

In what just became the largest U.S bank failure in history and the world for that matter, the Office of Thrift Supervision late Thursday 09/25/08, seized Washington Mutual (WM) and transferred control to the Federal Deposit Insurance Corporation, which then immediately sold Washington Mutual’s (WM) assets to JP Morgan Chase (JPM). The FDIC ranks bank failures [...]

Ben Bernanke stars in â€œDie Hard, Can the Fed Kill Gold and Silver?â€

Alex Stanczyk — Thu, 18 Sep 2008 16:48:59 +0000

Ben Bernanke must feel like Bruce Willis standing on the financial tarmac of the world as he pathetically waves his flags screaming â€œkeep circlingâ€ to the thousands of banks and financial institutions currently circling the sky in a holding pattern and all running low on fuel. Before long it will be car manufactures and computer companies [...]

Bank Failures Up 250% for the Third Quarter

Fred Fuld — Sun, 07 Sep 2008 03:03:00 +0000

Another bank just bit the dust. Nevada based Silver State Bank just closed down by Nevada regulators due to bad loans. The Federal Deposit Insurance Corporation was named as receiver. Andrew K. McCain, son of Republican presidential candidate John McCain, was on the bank's Board of Directors until July.

According to the FDIC, this is the seventh bank failure for the third quarter, an increase of 250% over the second quarter, and the quarter isn't even over yet.

By the way a lot of banks appear on the SEC Naked Short List.

Why Does the FDIC Need Help From the Treasury?

Graham Summers — Tue, 02 Sep 2008 11:34:26 +0000

Sep 2nd, 2008: I think the FDIC may be understating the true list of problem banks.

Latest FDIC Report Reads Like a Horror Novel

Mike Larson — Fri, 29 Aug 2008 07:30:00 +0000

Every three months the Federal Deposit Insurance Corporation (FDIC) puts out "Quarterly Banking Profiles." Most investors have never heard of them. The mainstream press has largely ...

Another Bank Shut Down By Regulators

Daniel Shepard — Sat, 23 Aug 2008 11:45:32 +0000

On Friday August 22nd, The Columbian Bank and Trust Company in Topeka Kansas, was shut down by that state’s Office of the State Bank Commissioner. The FDIC (Federal Deposit Insurance Corporation) was named as receiver and it has signed an agreement with Citizens Bank and Trust of Chillicothe, Missouri, to have that bank buy the [...]

Government shuts down mortgage lender IndyMac

Raymond Teo — Sun, 13 Jul 2008 04:41:36 +0000

LOS ANGELES - IndyMac Bank’s assets were seized by federal regulators on Friday after the mortgage lender succumbed to the pressures of tighter credit, tumbling home prices and rising foreclosures. The bank is the largest regulated thrift to fail and the second largest financial institution to close in U.S. history, regulators said. The Office of Thrift [...]

Stock Market News & Stocks to Watch from StraightStocks » Federal Deposit Insurance Corporation

U.S. Bank Failures Hit 124 – Analyst Blog

Zacks Analyst Blog Highlights: JPMorgan Chase, Fifth Third Bancorp, Zions Bancorp, SunTrust Banks and PNC Financial – Press Releases

Bank Failures Rise to 123 – Analyst Blog

Bank Failure Tally Reaches 120 – Analyst Blog

DrStockPick.com Stock Report! 11/05/09, DAKT, PSFT, COKE, CPWM, FCNCA, SCOR

Regions Joins TAG Program – Analyst Blog

Zacks Analyst Blog Highlights: U.S. Bancorp, JP Morgan Chase, Fifth Third Bancorp, Zions Bancorp and SunTrust Banks – Press Releases

Improving financial regulation and supervision

Pacific Premier Bancorp, Inc. (PPBI) Reports Small Loss in Third Quarter

Zacks Analyst Blog Highlights: CVB Financial, JP Morgan Chase, Fifth Third Bancorp, U.S. Bancorp and Zions Bancorp – Press Releases

U.S. Bank Failures Reach 99 in ‘09 – Analyst Blog

Feedback from Buttonwood Gathering

USB to Acquire a Part of BB&T – Analyst Blog

U.S. Banks – Industry Outlook

AmEx Diversifies Funding – Analyst Blog

Corus Bank Fails – 92 So Far in ‘09 – Analyst Blog

Economy Out of the Woods? – Analyst Blog

BofA Retains Top Rank – Analyst Blog

Bank Failures Continue – Analyst Blog

Colonial Officially Files – Analyst Blog

Taylor Bean Files for Bankruptcy – Analyst Blog

Zacks Bull and Bear of the Day Highlights: Transcept Pharmaceuticals, Nabors Industries, Guaranty Financial Group Inc., Banco Bilbao Vizcaya Argentaria and BB&T Corporation – Press Releases

BBV, PWRM, DrStockPick Watch List! for Monday August 24, 2009, Banco Bilbao Vizcaya Argentaria, S.A. and Power 3 Medical Products Inc, PWRM.OB

Citigroup Faces TARP Audit – Analyst Blog

Colonial Will Not Hurt BB&T – Analyst Blog

BofA Sues Colonial – Analyst Blog

DrStockPick.com Stock Report! 8/13/09, HALL, PAET, IKNX, PKY, RODM, NOC

Zacks Analyst Blog Highlights: JPMorgan Chase, Wells Fargo & Company, Zions Bancorp, BB&T Corp. and Fifth Third Bancorp – Press Releases

Bank Shutdowns Continue – Analyst Blog

The FDIC is in Trouble

NewAlliance Beats Again – Analyst Blog

Wilmington Does Not Fall Short – Analyst Blog

First Capital Bancorp, Inc. (FCVA) Sees Problem Loans Decrease in Most Recent Quarter

Wilmington Trust to Fall Short – Analyst Blog

PennyOmega.com Stock Report! 7/17/09, CVA, BEAC, TSRA, SHIP, LF, BOMK

Chas. Schwab Q2 a Mixed Bag – Analyst Blog

BB&T Reports Strong Q2 Results – Analyst Blog

An Economy on Life Support

Off-balance-sheet federal liabilities

Figure 1. Federal debt held by the public as a percent of GDP, 1790-2008, and projected for 2009. Data source: Congressional Budget Office.

Figure 2. Debt held by the public as a percent of GDP, 1790-2008, and projected for 2009-2083 under the "alternative fiscal scenario". Data source: Congressional Budget Office.

Trusting Banks as Far as You Can Throw Them

Wall Street vs. Main Street: The Regulatory Battle Begins Tomorrow

Prieur’s readings

The Almighty Dollar

What You Need To Know About FDIC Insurance

Another Bank Failure Makes 33 So Far This Year

America’s Financial Oligarchy Is Still in Control

Geithner Seeks Regulatory Powers – Analyst Blog

Government Reiterates Continued Support For Banks

The Obama Stimulus: Truth and Consequences

Four More Banks Shut Down On Friday 02/13/09

Gold and the Fear Trade

Concerning a “Bad Bank” Scenario – Analyst Blog

Bank Of America Getting $20 Billion From Government

FDIC Finds Buyer For IndyMac

Two More Banks Fail

Guns, Safes and Treasuries: America’s Top Sellers

U.S. Government Invest $20 Billion In Citigroup

FDIC Plan Could Prevent 1.5 Million Foreclosures

FDIC-Backed Banks Can Fail

U.S Records 17th Bank Failure In 2008

FDIC to Increase Cost of Deposit Insurance

3 Questions The Government Doesn’t Want You To Ask About the Financial Crisis

Washington Mutual Goes Under

Ben Bernanke stars in â€œDie Hard, Can the Fed Kill Gold and Silver?â€

Bank Failures Up 250% for the Third Quarter

Why Does the FDIC Need Help From the Treasury?

Latest FDIC Report Reads Like a Horror Novel

Another Bank Shut Down By Regulators

Government shuts down mortgage lender IndyMac

Ben Bernanke stars in â€œDie Hard, Can the Fed Kill Gold and Silver?â€